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Thinking about getting a lodger?

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A spare room in your home might be the source of valuable extra income if you take in a lodger. In addition to the extra income, there are several issues you might want to consider before going ahead and sharing your home with a lodger.

Let’s take a closer look at some of these:


  • in sharing your home with you, a lodger also brings additional risks of loss or damage;
  • these additional risks may not be adequately covered by your existing home insurance – you may need to check the extent to which cover is provided or whether you need separate, purpose-designed home insurance for lodgers;
  • in addition to protection against damage to the structure and fabric of the property, the cover may need to pay particular attention to the risk of theft, loss or damage to your contents as well as providing indemnity against potential claims from your lodger that you are liable for an injury or damage to his or her property;

Income tax

  • just as with income from any other source, the money you make from letting a spare room to a lodger is also subject to income tax;
  • the good news, however, is that the government’s Rent a Room scheme let’s you earn the first £7,500 from letting your spare room completely tax-free;
  • if your income from this source in any one year is less than the threshold of £7,500, you do not need to do anything, the tax-free allowance is granted automatically;
  • if the rental income from your lodger or lodgers is more than £7,500 a year, you need to include the statement in your annual tax return and claim the tax-free allowance;
  • to participate in the Rent a Room scheme, your lodger needs to be sharing the home in which you also live, and the accommodation must be adequately furnished;
  • the scheme – and its tax-free allowance – extends to guest houses and bed and breakfast accommodation (in which the owner also lives), but does not include property converted into self-contained flats (even if you live in one of them);

Owner-occupiers and tenants

  • the tax allowances available through the Rent a Room scheme may be claimed whether you are an owner-occupier or a tenant of the property in question;
  • if you are an owner-occupier with a mortgage on your property, you do need to contact your mortgage provider and advise them of your intention to take in a lodger;
  • if you are a tenant, of course, you need to secure the permission of your landlord before taking in a lodger;
  • your landlord may need to consider where they stand with respect to any building insurance – and any additional risks to loss or damage to the structure and fabric of the building;
  • if you are the tenant, you might not previously have thought about the need for home insurance to safeguard your possessions and contents of your rented home;
  • once you take in a lodger, however, it may be especially important to consider the benefits of home insurance and the protection it offers against loss or damage of the contents of your home while it is shared with a lodger – and the need to protect yourself against potential claims from your lodger alleging your liability for an injury or property damage.

If you have a spare room in the home you own or rent, taking in a lodger may be a source of useful extra income. It is imperative, however, that you ensure you have appropriate insurance in place as well as your landlord’s or mortgage provider’s permission to have a lodger.