With over 7.8 million UK households estimated to have at least one spare room, the temptation to earn extra income means many homeowners are entering into casual arrangements with lodgers and leaving themselves open to financial disputes and hefty bills.
A shocking 60 per cent of homeowners who currently rent out a room failed to collect a deposit, request a reference or even carry out basic credit checks.
As a consequence, one in six of these ‘casual’ landlords admit to having footed the bill for damage caused by their lodger, at an average cost of £2,240 per incident.
Damage to property accounts for 44 per cent of the problems encountered when renting a room. Other common complaints include late payment of utility bills, non-payment of rent, inconsiderate behaviour and upsetting neighbours, family and friends.
Matt Pernet, Head of MORE TH>N Home Insurance, said:
“Making the most of a spare room is a great way to earn extra income but we encourage homeowners to conduct credit, reference and financial checks as well as agreeing basic terms with a lodger, even if the lodger is a friend.
"Over and above protecting your possessions, this will help avoid conflict and ensure you don’t leave yourself open to potential costs further down the line.”
Landlords in West Midlands are paying the highest price for careless lodgers, with the average cost of repairs for damage caused by lodgers in this region reaching £3,545.
Lodgers in the South West are the most careful, with only 8 per cent causing damage for their landlords to repair.
MORE TH>N’s top tips when taking in a lodger:
1. Check with your lender whether you're allowed to rent out a room under the terms of your mortgage.
2. Clarify what your home insurance covers as taking in a lodger may mean you’re no longer covered for certain incidents.
3. Understand the tax implications and benefits - directgov.co.uk provides further information on the Rent a Room scheme that allows you to receive up to £4,250 a year
4. Agree the basic terms of the arrangement with your lodger to ensure it covers rent, bills, notice periods, etc.
5. Conduct a background check on a potential lodger, even if they are known to you. Various online companies can run a basic credit check on prospective tenants for a fee or conduct your own research through social networking sites and references, which you’ll be able to get from an employer.
Casual Landlords by region:
- West Midland: Spend the most money putting right damage caused by lodgers – £3,545
- North East: Spend the least money putting right damage caused by lodgers – £1,600.00
- South East: Only three per cent have had items stolen by their lodgers. This is the lowest number in the UK and far below the national average is 11 per cent
- South West: Least like to encounter problems with their lodgers; only eight per cent experience significant problems with lodgers which is less than half the UK’s average figure
- North West: Most likely to have taken in a lodger within the past two years
- London: Most likely to take on a lodger to provide extra company around the house (20 per cent cite this as a main motivation for renting, compared to national average of 13 per cent)
- East Midlands: Most likely to be motivated by money when taking in a lodger: almost three quarters (73 per cent) cite ‘extra income to pay the bills/mortgage’ as a main motivater when considering renting (compared to 57 per cent nationally)
- Scotland: Are amongst the most savvy when it comes to checking their lodgers; one quarter (25 per cent) carry out credit checks before allowing lodgers to stay (compared to 14 per cent national average)
- East Anglia: Are amongst the most savvy when it comes to taking in lodgers; 58 per cent collect a deposit before allowing lodgers to stay (compared to 39 per cent national average)
- Yorkshire: Least likely to collect a deposit, with only 25 per cent compared to 39 per cent national average
