The ultimate guide to lodger insurance

The Government’s Rent a Room scheme allows live-in landlords to earn £7,500 tax-free by letting a spare room in their property. If you’re thinking about generating some extra income by having a lodger, there are a few things you’ll need to think carefully about before taking the plunge.

Our guide explains what you need to know.

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Tailored lodger insurance starting from just £115 a year

What is a lodger?

A lodger is a person who lives in the same property as you. If you are letting part of your home to someone, then you become a ‘resident’ or ‘live-in’ landlord.

What’s the difference between a lodger and a tenant?

Typically, a lodger rents a room in your home and shares parts of the property with you, such as the bathroom, kitchen and living room. As they’re living with you, they may assume that their personal possessions come under your home insurance, so you’ll need to remind them that this isn’t the case.

It’s wise to set up a lodger licence agreement stating your terms to include:

  • How much the rent is, when it is payable (weekly or monthly) and how it is paid e.g. standing order
  • If utilities are paid separately or are included in the rent
  • The amount of deposit payable – e.g. a week or a month’s rent
  • House rules – e.g. noise levels, use of shared areas, cleaning, redecorating, guests, pets etc.
  • A signed inventory
  • The circumstances under which the rent could be increased
  • The notice period (could be a week or a month depending on how rent is paid)
  • The circumstances which will lead to automatic termination of the agreement and eviction without notice e.g. unpaid rent

On the other hand, a tenant lives in a property which you own, but do not live in. They have more legal rights than a lodger, as they have exclusive rights to the property they are living in for the period of their Assured Shorthold Tenancy agreement.

Get a lodger insurance quote

Tailored lodger insurance starting from just £115 a year

Do lodgers pay council tax?

Lodgers are not liable to pay council tax. It’s the resident owner’s responsibility so you will need to build a lodger contribution into the rent you charge if you wish to do so.

How many lodgers can I have?

If you don’t want your house to become registered as an HMO (House in Multiple Occupation) then you need to check with your local council as to how many lodgers you can have. This can vary from council to council.

The ultimate guide to lodger insurance

What rights do lodgers have?

Lodgers have fewer rights than tenants. For example, they are only ‘licensed’ to occupy the room you rent them and any other common parts of the house. As the live-in landlord you are free to enter a lodger’s room if you need to without their permission. A lodger is not protected by the Landlord and Tenant Act 1985, so a landlord only needs to provide reasonable notice to evict them. Though lodger agreements are not mandatory, they are useful to lay out both your rights and the lodger’s rights and obligations during the rental period so that you both know what is expected and where you stand. If you or your lodger wish to end the agreement then it’s standard practice for the notice to match with the payment period of either a week or a month.

Who needs to know if I have a lodger?

You’ll need to inform your current mortgage provider, your local authority and your current insurance provider.

Get a lodger insurance quote

Tailored lodger insurance starting from just £115 a year

What do we cover?

Unlike many insurance providers, Hamilton Fraser home insurance policies provide comprehensive cover for up to three lodgers at no extra cost, and, providing that the local council do not require you to have an HMO licence for the lodgers you have, we can cover up to six for only an additional £25. Our full cover – including accidental damage (if required) – is available at normal terms.

We don’t have any restrictions on the lodgers’ occupations, regardless of whether they are students or unemployed. All short-term lodgers are covered, including foreign students and those obtained through Airbnb.

You won’t even have to worry about property owner’s liability, as that’s included up to £2,000,000. For example if your lodger is unfortunate enough to injure themselves using a faulty electrical appliance in your home, you would be covered if they decided to sue.

If you’re an existing Hamilton Fraser Total Landlord Insurance customer you can get 20 per cent off our comprehensive home insurance policy. For more information call our team on 0345 310 6336.

If you have lodgers, we can provide you with the peace of mind that comes from affordable, comprehensive home contents insurance cover.

Get a lodger insurance quote

Tailored lodger insurance starting from just £115 a year