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?
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.