Landlords should be aware of laws concerning lodgers as the bedroom tax strikes, says Paul Hayes
The under-occupation charge, or ‘bedroom tax’, came into effect on 1 April. As a result, tenants with one extra bedroom will have their housing benefit reduced by 14 per cent. Taking in a lodger could help some tenants to pay the tax – but what issues should social landlords be aware of?
Is the tenant entitled to take a lodger? In most cases: yes. Secure tenants have a statutory right, and assured tenants of social landlords probably have a contractual right similar to that of secure tenants. Both will need prior written consent.
Starter, demoted and other forms of tenant may not have a right. This is where landlords’ policies will be important – tenants might challenge unfair policies; they might challenge a refusal to grant consent, and could rely on that when defending a rent arrears possession claim.
What is the lodger’s status? Generally, they are an excluded licensee under the Protection from Eviction Act, meaning the lodger is entitled to be given reasonable notice to leave. Tenants might not be aware of their occupier’s rights and could unlawfully evict lodgers by giving too little or no notice at all. There is unlikely to be a claim against the social landlord, but it may find an aggrieved lodger seeks its assistance. An unlawful eviction could bring adverse press coverage, and the tenant may have breached the tenancy by causing a nuisance. This all results in additional work for housing providers.
Social landlords need up-to-date information. Lodgers will be relevant to claims under the new universal credit or old housing benefit and they will be relevant to any possession action. Landlords will want to know information such as the name, age, sex of their tenant’s lodger, to determine that he or she is not an unlawful sub-tenant – the fact that someone other than a family member is living in the property will no longer be evidence of possible sub-letting.
Where possession is obtained against the tenant, the lodger’s interest will come to an end with the tenancy agreement and a bailiff can evict both parties. However social landlords need to be careful when accepting a tenant’s surrender of the tenancy to ensure they have or will remove the lodger, or they could end up with the lodger as their tenant.
Tenants need guidance and advice about lodgers. They need to know that they are responsible for the lodger’s behaviour and that they need to inform other authorities, because a lodger will affect housing benefit and council tax.
Other questions to ask are: what if a lodger is injured? Is the house in multiple occupation? Probably yes and it may need to be registered. In some London boroughs, the provision of sleeping accommodation for less than 90 days for money requires planning permission. All this needs to be resolved. Landlords and tenants should both seek independent legal advice.
Paul Hayes is head of housing litigation and dispute resolution at Lewis Silkin
Why taking in lodgers is a bad move when it
comes to home insurance
Homeowners who are about to welcome student lodgers as the university term begins might be unwittingly invalidating their home insurance, leaving property and possessions at risk. A ban on renting a room to a paying guest imposed by some of the UK’s biggest insurers means thousands of people may be living with invalid cover. Your policy may also be rendered worthless if you fail to check whether the lodger has an unspent criminal conviction.
Among the companies which refuse to provide home insurance to anyone taking in a lodger, student or otherwise, are esure and More Th>n. “We cannot provide home insurance to lodgers or paying guests because you [the policyholder] are giving access and responsibility for the security of your house to someone you do not know,” a spokeswoman for esure said.
“If a policyholder takes in a lodger without telling us, their home insurance is potentially null and void because withholding this information counts as non-disclosure.”
Tenants will soon be able to keep their benefits and rent from lodgers
Lodger rules to ease impact of bedroom tax
The major impact of the move, which the Department for Work and Pensions described as a ‘positive side effect’, is that it will help under-occupying tenants pay the bedroom tax. The change was made possible because the government has amended what counts as income in its draft regulations for universal credit.
Currently, claimants must declare income from lodgers. This can affect their entitlement to housing benefit, jobseekers’ allowance and income support.
Under the new regulations, from October 2013 tenants will be able to keep income from lodgers and retain full entitlement to benefit. The room let to a lodger will, however, be classed as a spare room and fall under the bedroom tax, which will be £14 per week on average.
Lord David Freud, welfare reform minister, has said taking in lodgers could be a solution for tenants hit by the tax, which affects social housing tenants of working age from next April. Between April and October, when universal credit begins, tenants’ entitlement will continue to be affected if they take in lodgers, but they will be temporarily exempt from the tax during this period.
Lord Richard Best, a crossbench peer, said the change provides a ‘real incentive’ to take in lodgers. He said: ‘I think David Freud deserves congratulations on removing barriers to this way of boosting incomes and getting at least some people housed at this mostly so depressing time for housing.’