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You鈥檙e a resident landlord if you let out part of a property which is your only or main home.

If so, you鈥檒l have certain rights and responsibilities:

• you鈥檙e responsible for keeping the property safe and in good repair
• a tenant or lodger doesn鈥檛 have the right to challenge the agreed rent
• you may be able to earn 拢7,500 per year tax-free (or 拢3,750 if you share the income with someone else) under the Rent a Room Scheme
• you can give less notice to end a letting than if you rented out the property as a whole

Ask potential tenants or lodgers for references and follow them up before signing any agreement. Read the guide about letting rooms in your home for more information.

The Rent a Room Scheme lets you earn up to a threshold of 拢7,500 per year tax-free from letting out furnished accommodation in your home. The threshold is halved to 拢3,750 if you share the income with someone else.

You can let out as much of your home as you want.

How it works

The tax exemption is automatic if you earn less than your threshold. Which means you do not need to do anything.

You must complete a tax return if you earn more than your threshold.

You can then opt into the scheme and claim your tax-free allowance. You do this on your tax return.

You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.

More information

Read the Rent a Room helpsheet for more detailed information on how to complete the form, and when it makes sense to opt out of the scheme.

Eligibility

You can opt in to the scheme at any time if:

• you鈥檙e a resident landlord, whether or not you own your home
• you run a bed and breakfast or a guest house

You cannot use the scheme for homes converted into separate flats.

The way you share your home with a lodger affects what kind of tenancy they have. This in turn affects their rights and how you can end the tenancy.

Your lodger is an excluded occupier

Your lodger is likely to be an excluded occupier if:

• they live in your home
• you or a member of your family share a kitchen, bathroom or living room with them

In this case, you only have to give them 鈥榬easonable notice鈥� to end the letting - and you will not have to go to court to evict them.

Reasonable notice usually means the length of the rental payment period. For example, if rent is paid monthly, you should give one month鈥檚 notice.

Your lodger has basic protection

Your lodger is likely to be an occupier with basic protection if:

• they live in your home
• they do not share any living space with you or your family

If your lodger will not leave when you ask them, you鈥檒l need to get a court order to evict them.

The length of the let

A tenancy or a licence can be either:

• periodic - run indefinitely from one rent period to the next
• fixed term - last a set number of weeks, months or years

If you do not agree the length of a let, it will automatically become a periodic let.

Licences can be open-ended for informal arrangements, like allowing a friend to stay on an as-and-when basis.

Rent

You can charge what you want for rent but should agree the amount with your tenant beforehand. You can also ask for a deposit and you can accept Housing Benefit for rent.

You must provide a rent book for tenants who pay weekly.

Council Tax

You will be responsible for Council Tax and can include part of the cost in the rent you charge. You must tell your council if having a tenant means you鈥檙e no longer entitled to a single person discount.

If you鈥檙e unsure who should pay Council Tax, check with your

Utility bills

If you pay the utility bills for the entire house, you can include a charge in the rent or install pre-paid meters.

You can only charge the amount you鈥檝e paid for gas and electricity plus VAT or you could face civil proceedings. Read Ofgem鈥檚 for more information.

Income Tax

Income Tax is payable on rental income you receive.

If you鈥檙e not in the Rent a Room scheme, you鈥檒l be charged Income Tax on any rental income you get after business letting expenses. Examples of business expenses include:

• insurance
• maintenance
• repairs (but not improvements)
• utility bills

If you鈥檙e in the Rent a Room Scheme, you鈥檒l pay Income Tax differently.

Capital Gains Tax

You may have to pay Capital Gains Tax when you sell your home if:

• you let out all or part of it
• you鈥檝e taken in more than one tenant or lodger at a time

However, you may be entitled to Private Residence Relief and Letting Relief.

Deposits

Resident landlords are not legally required to protect tenants鈥� deposit with one of the government-approved schemes.

Your local council may guarantee rent for a potential tenant who can鈥檛 afford a deposit.

How to end an excluded tenancy or licence

If your lodger is an excluded occupier, you only need to give them 鈥榬easonable notice鈥� to quit.

Usually this means the length of the rental payment period 鈥� so if your lodger pays rent weekly, you need to give one week鈥檚 notice. The notice does not have to be in writing.

You can then change the locks on your lodger鈥檚 rooms, even if they鈥檝e left their belongings there. You must give their belongings back to them.

How to end a non-excluded tenancy or licence

If your lodger is an occupier with basic protection, you must serve them a written 鈥榥otice to quit鈥�. The notice period will depend on the tenancy or agreement, but is often at least 4 weeks.

If your lodger does not leave, you鈥檒l need to get a court order to evict them.

Your lodger ends the tenancy

Your lodger can end the tenancy by giving you notice. They cannot do this during the fixed term of the tenancy, unless there鈥檚 a break clause.

The amount of notice they need to give depends on the tenancy agreement, if there is one. Otherwise, it鈥檚 usually at least 4 weeks (if they pay weekly) or one month (if they pay monthly).

Change of ownership

If you stop living in your home, the tenants can still stay there, but their tenancy type may change to reflect that you no longer live there.

If you sell your home and the new owner plans to live in the property as a resident landlord, they must:

• give notice to a tenant within 28 days that they intend to live there
• move in within 6 months of the sale

Until the new owner moves in, tenants will have more protection through tenancy laws, because during this time there鈥檚 no resident landlord. Their rights will depend on when they moved in. Find out about tenants鈥� rights in 鈥楶rivate renting: tenancy agreements鈥�.

If you die, a tenancy will usually continue as though you were still resident, until someone else takes ownership.

Your property may be classed as an House in Multiple Occupation (HMO) if you let rooms to more than 2 people.

There are extra safety requirements and standards for HMOs and you鈥檒l often need a licence.