|Lodgers Help Recession-Proof Chiswick Properties|
But the renting a room boom can bring problems for the unwary
Thinking of renting out a room in your house or flat in W4? Chiswick property owners take on lodgers to help pay the mortgage but the lodging boom can bring problems for the unwary.
The number of households with a lodger has increased by a quarter in recent years, six times higher than official figures show, according to a new study. The official statistics suggest that lodger numbers have reached 156,000, while the homeowner poll puts the figure at 970,000.
Latest research suggests that almost a million people were in lodgings, with half of new landlords taking someone in to boost their income. A survey carried out by a home insurance company of 500 homeowners who had taken on a lodger in the past two years also revealed almost one in five would not be able to pay their mortgage without the extra income.
The implications of a casual approach can be serious and it’s important to beware of the pitfalls. Three-quarters (74 per cent) of new landlords fail to carry out any background checks the insurer is warning homeowners to avoid ‘unofficial' arrangements with lodgers. This means drawing up a written agreement on payment terms, notice periods and conduct prior to a tenant moving in.
Christian Harper of Chiswick estate agent Oliver Finn "Homeowners should make sure that they have a legal agreement with the tenant. Typically a lodgers’ agreement which can be purchased from WH Smith or Rymans for a few pounds. Don’t forget to inform the local authority. Sharing your house or flat in Chiswick may have financial implications if you are currently claiming a single person discount as this will come to light as soon as your lodger registers to vote.”
The research suggests that new landlords keep tenants ‘under the radar' because they are worried about the tax implications. In fact, letting a spare room is tax free under the government's ‘Rent a Room' scheme. Be understanding that it’s your lodgers’ home too says Harper, "You will have to adapt your lifestyle to accommodate other peoples habits which can be difficult. Remember it is a business relationship.”
Commenting on the findings, Martyn Foulds, senior claims manager at Halifax Home Insurance said, "Getting a lodger in is a great way to earn some extra money to help with the household budget, but it's important to seek advice from your home insurer beforehand, as this can often impact on the terms of your cover, and failure to let your insurer know of your changed circumstances could potentially invalidate a future claim.
"Also, remember your lodger's possessions won't usually be covered under your home contents policy, so they will need to obtain their own home contents cover. It's also really important to seek reliable references for the person, and ensure that binding legal agreements are in place, so that all parties know where they stand."Oliver Finn
October 30, 2009