Lodger Agreements Explained
Lodger agreements, also known as lodger contracts, are written contracts between the landlord and the lodger. Rental and tenancy agreements are usually in written or verbal form and are not considered contracts, as you would understand them in a legal sense. The agreement essentially stipulates the rights of both parties, the landlord and the lodger, and how they will interact with one another in terms of conditions of living and tenancy. It is a type of occupancy agreement that protects both the homeowner and the lodger, creating a mutually beneficial living experience.
Generally, a lodger agreement typically involves renting a room individually in a home or shared apartment, so the person living there is responsible for keeping up with rent and utility payments, etc., and does not have any rights to the common areas of the property that tenants have. Similar to a tenancy agreement, the agreement details what happens if either the lodger or landlord breaches the contract. Lodger agreements are not usually required under the Lodger Occupancy Rights Bill of 2016, though the bill is still being deliberated in Parliament.
What differs lodging from renting or renting a property? A lodger and tenant are different because tenants sign tenancy agreements — basically , rental agreements — while lodgers sign lodger agreements. Tenants are also given certain rights when they rent the property for a flat fee every month, whereas lodgers don’t have very many rights. A lodger retains fewer rights because they are not typically granted full control over the property. Sometimes landlords refer to lodgers as guests. They are allowed access to their rooms but often cannot use the common areas of the property.
Lodgers generally share basic amenities like kitchens and bathrooms, and they have limited rights when renting from a homeowner. A tenant has the right to stay with a homeowner for as long as they want to or for however long they signed the tenancy agreement. A lodger, however, lives in the homeowner’s home at the owner’s discretion. They can be asked to leave at any moment with little notice and with no penalty to the owner. If the owner and lodger split, and the lodger cannot afford the full rent on his or her own, then a landlord can kick the lodger out. If a tenant moved out of a house, even with little notice, a landlord could make them stay due to legal issues.
Key Elements of a Lodger Agreement
When crafting a sample lodger agreement, there are a few elements that should be included to increase its credibility and enforceability. While there is no right or wrong way to format a lodger agreement, specific details should be a vital part of any document you intend to use. The names and personal details of the two parties is the most basic information that your lodger agreement should contain. At a minimum, you would need the full name and contact details of both the lodger and the landlord. The duration of stay is the next thing you need to cover in your lodger agreement. The easiest way to detail this part of the contract is to use a start and end date, something along the lines of, "The lodger shall reside at the property from MM/DD/YYYY to MM/DD/YYYY." Depending on the timing of your agreement, you may also want to stipulate specifics about payment. For example, if the lodger is expected to be a short-term visitor then you may want to have daily or weekly rates of payment. If they’re going to be there for a while, then you may want to base their rent on a monthly rate. Regardless, it’s always important to include when payments are due. For example, "Payments are due on or before the first of each month" or "Payments are due on or before the 15th of each month." Once you’ve established payment periods, you’ll want to include specific details like method of payment and late fees for late payments. One subject that is often hotly debated is house rules. In order to set boundaries with your lodger regarding overnight guests, quiet hours, water usage, and the host’s access to the lodger’s room, you should consider incorporating house rules into your lodger agreement. A strong lodger agreement contains significant terms and conditions that cover house rules. These rules are not only enforceable in civil court, but will allow the lodger to know what the host expects from them as well. It gives the host a chance to address pet ownership, non-smoking policy, alcohol and drug abuse, illegal activity, and excessive noise openly, upfront, and ahead of the relationship, reducing the chances of friction later on. Finally, you’ll need to communicate specifics about termination. A lodger agreement should contain information about how a lodger can terminate the agreement, as well as the host’s rights to terminate the contract. You would want terminology similar to the following: "A lodger may terminate this agreement for any reason with one month’s notice. A host may terminate this agreement for any reason with one month’s notice."
Legal Considerations and Requirements
When it comes to drafting a lodger agreement, both lodgers and landlords must be aware of the necessary legal considerations for a smooth tenancy. From liability and insurance to confidentiality and limitations of liability, ensuring the agreement is proper is in the best interest of both the tenant and landlord. This section of the lodger contract guarantees that everything, from previous discussions between tenant and landlord to any inventory attached to the property, is on record for future reference.
Firstly, both lodgers and landlords should be cognizant of any housing laws and regulations imparted not only locally, but also nationally. In the UK, there are specific responsibilities and important laws related to lodger agreements. For instance, the Lodger Rent Restrictions Act of 1999 restricts rent increases for those who live as a lodger. It also ensures that a lodger has the full rights within the home, protecting the rights of the individual residing in the property. In addition, other national housing laws include the Gas Safety (Installation and Use) Regulations 1998 and the Housing Act 2004, which both require safety information and security measures to be established for tenants renting out rooms in the property. This is particularly applicable if the lodger will have the key to the back door or access to the living room and kitchen.
Additionally, in situations where a lodger will be living in the home for a period in excess of 7 years, the landlord may be required to become a registered social landlord with the Housing Corporation, which is something that most lodgers rarely think about. Therefore, the lodger agreement needs to be drafted in a way that allows the landlord to secure registration as well as complying with the laws associated with housing association registrations.
Although these are just two examples of some important legal considerations for lodger agreements, ensuring compliance in such situations requires a thorough understanding of any housing regulations that may impact both the landlord and tenant. A sample lodger agreement will typically include such considerations, saving both parties work down the road. It also provides protection in the case that the agreement should fall into dispute.
Benefits of a Lodger Agreement
For the landlord, there are several advantages. Firstly, there is the major financial advantage of no longer having to pay out fees to an estate agent to handle the management of the property. Even more importantly, if a rent payment is missed the landlord will not be required to go through the courts to evict a lodger as a lodger is a licensee and not a tenant. Also, the use of an official lodger agreement will prevent confusion arising over the amount of rent due, when it is due and how much the lodger has actually paid. This will also prevent incidents in which the lodger claims to have left a certain amount of rent in an envelope somewhere in the house only for the landlord to never find it.
The lodger also stands to benefit from renting a room in a property that uses an official lodger agreement. For example, they will immediately know what their obligations and responsibilities are as well as what the limits of their rights as a lodger are. This avoids the possibility of the landlord wrongly terminating the lodger’s right to live in the property and keeps everyone on the same page. In addition, the lodger will also benefit from many of the same practices and procedures that have been put in place specifically to protect and favour the landlord. The various practices and procedures that are in place will give the lodger valuable legal protection in a similar way to how they afford protection to the landlord.
Tailoring a Lodger Agreement Template
Customizing a lodger agreement template is a way to ensure it meets specific requirements for the lodger-sharing arrangement. However, before making any changes, ensure the changes comply with any statutory requirements. The Fieldington lodger agreement example can be customized by replacing the fields with the information specific to the arrangement between the lodger and the landlord. Changes to the agreement must be mutually agreed to by both parties, and a copy of the signed agreement must be retained by both parties once all sections are completed. Section 1: The address section must include the address of the property being sublet to the lodger. Section 2: The lodger section must contain the name of the lodger occupying the property and the full names of the other tenants renting the property. Section 3: The landlord section must include the names and addresses of all joint tenants in the property. This section must also specify and confirm which joint tenant is responsible for returning the deposit at the end of the tenancy and for providing the notice period. Section 4: The rent due section must specify how much rent is due , what utilities are included and how often the rent is paid (i.e. weekly). Section 5: The deposit section must specify how much of a deposit is paid by the lodger and how much will be returned to the lodger once the tenancy ends. Section 6: The notice period section must confirm how much notice must be provided if any of the lodgers or joint tenants decide to leave the property before the tenancy ends. Once the sections are completed and agreed to by all tenants and the landlord, a signed copy of the agreement by both parties secures each party understanding of the terms of the lodger share arrangement.
Common Pitfalls to Avoid
In the excitement of entering into a new lodger agreement, it’s easy to get the wording wrong and to leave a number of important terms out. This can actually lead to problems further down the line. For example, not outlining how much notice either party must give to end the lodger agreement can lead to disputes.
Other mistakes you should look out for include:
• Leaving the agreement open-ended: Without an end date the lodger might decide to stay beyond the original agreed period and just keep requesting extensions. Giving them an official end date prevents this from happening.
• Using vague language: Be as clear and concise as possible when setting out the terms of the lodger agreement. Failing to do so might lead to the lodger thinking they have access to areas of the property that you don’t want them to.
• Omitting money-related terms from a lodger agreement: You must make it clear when the rent will be paid, how much is owed and whether or not a holding deposit is needed.
• Using the agreement if a lodger is moving in after a furnished tenancy: If you’ve been renting the property as a furnished premises and someone is moving in after the existing tenancy ends, then you must use an Assured Shorthold Tenancy Agreement (AST).
By using the advice and templates contained within this guide, you should be able to create an accurate lodger agreement without making any of the common mistakes listed above.
Ensuring Equity and Clarity
It is important that both parties to a lodger agreement ensure that the entire process is fair and transparent. Especially in a circumstance where a lodger may feel somewhat vulnerable, it is important that the contract that both parties are entering into is one that is reasonable and fair to both parties with terms and conditions that are clearly understood. Whilst a lodger may just want someone to take the spare room on a short term basis, it is important that they have the right to negotiate terms and conditions and only proceed with the arrangement if they are satisfied with those terms.
Both parties should be encouraged to communicate with respect and open minds in drafting the terms of the lodger agreement. If a concern arises during the drafting process, it is wise to temporarily put that issue aside and move on to discuss something else. Returning to the issue later is often the best way to address a concern that has the potential to escalate if left to fester. If you can determine why a line is drawn at a particular point in the terms and conditions perhaps an alternative pathway can then be negotiated. Some terms and conditions simply cannot be negotiated on and will need to be considered a deal breaker , but if other options are available then compromise should be encouraged.
A lodger should not be afraid to address negotiations for relief from what they may consider to be unreasonable terms. The lodger agreement essentially governs the relationship between the landlord and lodger (tenant and landlord). Similar to a lessor and lessee negotiating a commercial lease agreement, the terms of the agreement will not be filed away to never be looked at again after signing. If a lodger considers that the deductions from their rent are excessive or unreasonable, it would be inconsistent with the spirit of lodger agreements for a lodger to not raise this concern and seek for a more reasonable outcome. Many reasonable landlords would be happy to enter into further negotiations in the interests of keeping a good tenant who might otherwise be wasting time and money in litigation or mediation with a dedicated landlord/tenancy dispute resolution tribunal.
Whilst no one likes horror story scenarios when trying to establish a working relationship, the reality is that the more time that you can dedicate to trying to resolve the conflict while it is manageable, the more likely it is that an amicable arrangement can be reached.