Many people are (rightfully) confused about the difference between a lodger and a tenant, with many using the terms interchangeably. There are a number of legal distinctions between the two, and your living arrangements can dramatically affect the rights and responsibilities of both parties.
The biggest difference between a lodger and a tenant is the contract you have in place. With a tenant, you will have a tenancy agreement – typically an Assured Shorthold Tenancy agreement which grants the tenant at least six months’ tenancy and a two-month notice period. Lodgers, however, have a licence which is a different type of agreement. Hence why lodgers are legally known as “licensees” – not tenants.
A licence grants the occupier to be in the property legally, so that they are not seen as a trespasser, and will lay out house rules and conditions of their stay. Tenants have a lot more freedom and privacy in their day-to-day lives. Whilst they pay their rent, they effectively “own” the space that they occupy during the period of their tenancy.
Renting a room in your home can be massively beneficial to a homeowner with a spare room that is otherwise not being used. Not only can you earn up to £7,500 per year tax-free as part of the government’s Rent a Room Scheme, but having a lodger can help you financially with your household running costs if you live alone.
Lodger = excluded occupier
Tenant = non-excluded occupier
An excluded occupier is someone who shares accommodation with the homeowner, with limited rights,
whilst a non-excluded occupier occupies the property independently of the property owner or landlord.
So how do you know if you have a lodger or a tenant?
Does the occupier live in your main home, sharing facilities with you (e.g. occupying a spare room or the living room, sharing the kitchen)?
They are a lodger.
Does the occupier live in your main home, but with their own entrance and facilities (e.g. summer house at the end of your garden, or a self-contained basement with facilities, etc)?
They are a tenant.
Is your property split into purpose built flats, with yourself and the occupier living in different flats?
They are a tenant.
Do you live elsewhere, but the property is rented room-by-room to multiple occupants sharing facilities?
They are tenants house-sharing, and you may need a HMO licence and want to look into HMO insurance.
Do you have a signed licence agreement, despite the occupier occupying the entire house or flat and you living elsewhere?
They are still legally a tenant and not a lodger, even if you have signed a licence agreement with them instead of a tenancy agreement.
The Rights of a Lodger:
- The landlord has the right to enter the room of a lodger without permission.
- The lodger shouldn’t be allowed to put a lock on their door, to keep the landlord out.
- The landlord is within their rights to ask the lodger to move to another room within the property.
- Landlords are not required to protect any deposit within a tenancy deposit scheme.
- Lodgers require “reasonable” notice to leave your home. This is typically 28 days.
The Rights of a Tenant:
- The landlord is required to give at least 2 months’ notice if they are repossessing the property.
- The deposit must be lodged with a tenancy deposit scheme.
- The tenant requires at least 24 hours’ notice for inspections or visits.
- The landlord is obligated to provide an Energy Performance Certificate, as well as ensure that the property is safe and all gas and electrical equipment is maintained.
Whether you have a lodger or a tenant, the type of insurance you will need will be very different. Having a lodger will mean that you will need lodgers insurance (a specialist home insurance policy), and will need to speak to your current home insurance company to discuss your options.
If you have a tenant then you will need landlord insurance for resident landlords, as your home insurance may be invalidated if used for rental activity.
If the utility bills are in the occupants name and are paid by the occupant is he a lodger or a tenenet?
The payee of the bills does not determine whether they are a lodger or tenant. Please use the guidelines in this article to help you decide.