Lodger Agreements Explained
The terms ‘lodger agreement’ and ‘lodger license’ refer to the same sort of contract, one which governs the occupancy by someone who is neither a tenant nor a guest, but rather a lodger in your property.
Lodger agreements govern those arrangements where someone has exclusive use of one or more rooms of a property but shares other amenities, such as a living room and bathroom, with other residents, those residents being either other lodgers or a resident landlord, according to whether your lodger has exclusive rights of occupancy within the building or if it is a situation where you have their own room within your home or within a separate annex within your residential property. An example of this would be where you are a lone professional who has a room, kitchen, bathroom and maybe shared garden in a flat with another lodger. If you had a lodger who shared the same area, they too would be governed by a lodger agreement.
We use the term ‘lodger agreement’ because in law the terms tenant and tenant license exist, so that people could be ‘lodgered’, as opposed to being let out or rented, so far as academic ‘real estate’ is concerned.
A lodger agreement is an agreement, as its name suggests, which governs the relationship between a resident landlord and a lodger, an individual who has been granted ‘exclusive possession’ (the legal term) of either a room or a rooms in return for a consideration, usually in the form of rent. This is an important distinction between a lodger and a tenant. Essentially, lodgers live in a property where they do not have exclusive possession over their room, flat, mini suite, house or whatever. Generally, lodgers will not pay a market rent or what their ‘space’ is worth as far as the going rate for a room in a house or a flat , because one of the reasons why we use lodger agreements is that they are exempt from some of the provisions of the Housing Act 1988, the main legislation which protects residential tenants in England and Wales. For this reason, the proceeds from a lodger agreement are not subject to income tax and you are not required to carry out ordinary repairs under the provisions of the Landlord and Tenant Act 1985.
A lodger agreement is important because it allows you, as the resident landlord, to set the framework for the lodger’s stay, and to provide some security of tenure and guidelines for behaviour, for you and for him or her. It protects your rights as owner of your home, affords a level of security to the lodger and, if well written, provides an element of protection against disputes in the future.
As you would with any tenancy, it is important that you check out the lodger adequately – references, employers, credit check, etc. The usual provision for tenants will not apply here because of the ‘lodger’ status of the agreement. You will also not be required to comply with the general provisions of the Housing Act 1988, which carry with them strict rules and obligations for rent and occupiers, so a lodger agreement creates greater flexibility for the resident landlord.
The most common terms in a lodger agreement cover:
In some cases, there may be additional provisions, such as:
Once you have decided that you want a lodger agreement, and have drafted it satisfactorily, you should then formally terminate it using the relevant notice set out in Tenants Bad or Tenants Good – Whose Mistake is it? and How to Properly Terminate a Lodger Agreement: Essential Tips and Template, otherwise you may end up back where you started, trying to recover possession under Tenants Bad, How to Evict Tenants or Tenants Bad, I Want My House Back – Protect Me From the Tenants!
Lodger Agreement Termination Reasons
The most obvious reason for terminating a lodger agreement is the expiry of the term. Given that lodger agreements usually have no fixed term, unless they include a notice period, a lodger can give you notice to terminate at any time, unless you have given them notice to vacate, in which case they will only be able to stay on for a few days after the notice period has elapsed to enable them to make living arrangements elsewhere. Occupiers without a tenancy agreement might otherwise have a right to remain at the property under the Protection from Eviction Act 1977 ("PA 77").
However, in many cases, your reason for wanting to end the agreement will be because those living there have breached the terms of the agreement. For example:
• They failed to pay rent
• They had guests staying overnight who were not permitted
• They caused damage to the property.
• They caused a nuisance or disturbance to neighbours
These breaches often seem small in isolation, but if let to continue, may justify your decision to conclude the lodger agreement sooner rather than later. Of course, you will need to issue the lodger with a written warning and provide them a reasonable opportunity to put things right before taking the decision to terminate the agreement. Take action as soon as you become aware of the issue in order to ensure that the lodger is clear about the reasons for termination. You should also keep copies of all evidence, whether photographs or witness statements, so that you have this to hand in the future should you need to take legal action against the lodger.
Agreement is another commonly encountered reason for ending a lodger agreement. If you discuss matters with the lodger and agree that their departure is the way to resolve the issues in question, this is better than trying to force them to leave against their wishes. If the lodger agrees to a date when they will vacate the property, it is sensible to confirm this in writing.
However, you must be careful with mutual agreement if the lodger is a vulnerable adult or has reduced mental capacity. If they are unable to understand who you are and why you are asking them to leave, simply obtaining their signature to an agreement without proper discussion may not be enough. In that case, it may be necessary to seek directions from the court (in which case you should obtain legal advice and representation).
Most lodger agreements contain a provision allowing for the agreement to be ended if you need to carry out repairs to the property that cannot be avoided and that you cannot live together in the meantime. This allows for a degree of flexibility and Annexe 1 of the fair rent lodger agreement clearly states that you do not need to give the lodger advance notice that the agreement is ending.
The exception to the above is where we are dealing with lodgers who have been living in the property for less than six months. The law provides an implied term that such lodgers cannot be evicted before that period has elapsed unless you have given them the specific notice required. This will usually be in the form of a notice to quit, but sometimes a simple email will suffice. Set out the reasons for the termination in this notice and give the lodger more than seven days’ notice to vacate.
Lodger Agreement Termination Legal Requirements
In normal circumstances, a lodger in a common law tenancy can be asked to leave the property at any time by either party simply by giving ‘reasonable notice’ to the other party. However, if a lodger is protected by either the Protection from Eviction Act 1977 (if the property is subject to a rental agreement that started after 15 January 1989) or the Protection from Eviction (Gas and Electricity Board) Regulations 1986 (if the property is owned by a privatised supplier of gas or electricity), more formal processes must be followed in order to evict them. If the lodger in your property is protected, you must give the lodger prorated notice in writing up to a maximum of three months. As with any Section 21 notice served on a tenant, the notice must include both your name and address and the name of the tenant. If the notice does not comply, the type of tenancy will not change from assured to common law, which will allow you to end it without needing a possession order. If the lodger does not vacate the property by the end of the notice period, landlords must apply to the court for an interim possession order (IPO). Once you are granted an IPO, the tenant must be evicted using county court bailiffs. An IPO does not require either a judge or a hearing and the possession order can be obtained in as little as 18 days. It is also a criminal offence not to leave a property after receiving a possession order after an IPO.
Terminating a Lodger Agreement
Lodger agreements can be terminated by service of a notice. In the case of a lodger without exclusive possession of their room, the lodger will most likely be classed as a licensee. This means that they have no right to stay in the property beyond the service of a relevant termination notice. The first step in terminating a lodger agreement is to check what notice period is required. This will depend on both the provisions contained in the lodger agreement and the period of the license. If there are no specific provisions dealing with the notice period and the license is not protected by a statutory periodic tenancy (made up of how long the original fixed term was), then either party can give notice in any period expiring on the last day of a period of the license, irrespective of how long the licence is for. So, for a lodger who pays their rent weekly, this could mean giving only 7 days’ notice to terminate the agreement. Conversely, for a monthly rent, the notice could need to be over a month long. The best way to serve a notice is to provide the notice in writing and covered the following key points: If a lodger disputes the validity of the termination notice, then they may make an application to the court for a declaration that they remain in occupation of the property. Ideally the lodger agreement will stipulate whether a court declaration is required for the lodger to stay in the property beyond the date specified in the termination notice. If the lodger vacates the room, the landlord can make a claim for possession after the end date specified in the notice and remove the lodger in accordance with the decree obtained. It is an offence for the lodger to return to the property once they have vacated it. It is possible that a lodger may refuse to leave the property, or simply fail to pay the rent during the fixed or contractual period. In such instances a landlord does not have to give notice to the lodger, but can use an injunction (where the action is heard at court) to have the lodger ejected from the property. To do this a landlord will need to show that any damages for trespass can be collected from the lodger, so areas of the lodger agreement and whether the lodger has any income or savings should be checked.
Using a Lodger Agreement Termination Template
Now that you understand what provisions must be included in the proper termination of lodger agreement, you should use a termination of lodger agreement template to properly remove someone from your premises. The proper termination will include numerous provisions that are required under the law and any failure to strictly comply with requirements can cause the termination to be invalid. If the termination is invalid, you will not be able to get the lodger evicted and will have to start over. A lodger who is fraudulently terminated can also file a lawsuit against you for damages for taking the person out of the home.
If you or your roommate decide that it is time to terminate a lodger, you could take the risk and try to write your own . This is not a good idea because of the potential damages that could be incurred. Instead, consider using an online termination of lodger agreement template. A termination of lodger agreement template will have all of the necessary provisions required by law to terminate a lodger agreement. Simply filling in the blanks of the termination of lodger agreement template for your state and making any necessary changes will allow you to remove the lodger without any of the headaches. A properly terminate lodger agreement can lead to the smoothest process of calendar court related or other eviction proceedings that a homeowner can ask for.
Writing a Lodger Agreement Termination Letter
If you choose the option of terminating an agreement via a notice, you will need to draft this accordingly. A useful resource is a ‘Notice of Termination’, in which the framework for your notice is already produced, meaning that all you have to do is fill in the details.
For example, you should state the following:
For ‘the Tenancy’ – the tenancy at hand.
The address of the property.
The name of the Lodger.
The date of the notice (which should bring the Tenancy to an end 2 weeks from when you serve it).
Your name and signature.
The statement: "Please be advised you are in notification of my intention to terminate your lodger’s terms of occupation within the 2 week notice period described in Schedule 1 of the Terms agreed and signed by you on xx."
If you want a complete ‘Notice of Termination’, you can download our free template here.
However, if you don’t want to use the above template, you could simply put together a notice yourself. Here’s a guideline of the necessary parts:
This is strictly optional – but if you want to draft your own notice rather than using the template, you should include paragraphs similar to the above – and be sure to fill in any required information.
Post-Termination Considerations
Once the lodger has vacated the premises, you should carry out a final inspection and discuss with the lodger any issues there may be. Then you will be in a position to return the lodger’s security deposit. The deposit should only be withheld to cover damage or cleaning repair or replacement costs. If for example you have a claim for redecoration damage £400 but only retain £50 from the deposit you are not entitled to have the remaining £350 paid. Your claim is for £400 so you cannot "claim" anything but what damages actually relate to. The lodger has a right to an independent review with government approved or licensed scheme (all will be on the Ministry of Housing website) and you must provide the lodger with your address so they can write to you, if you have retained any of the deposit. All you need to do next is remove the lodger from your property records and await the next one!
Common Termination Errors
When it comes to terminating a lodger agreement, there are a number of common mistakes that landlords make which can lead to disputes with lodgers and even escalate to employment tribunals (especially if you have used a lodger agreement which states that the lodger is to be treated as an employee, which is not what happens in reality). One of the most common mistakes is not giving the necessary notice. In some areas of London, the lodger will be granted a licence for a minimum period of 4 weeks and not 2 months as is the case in rest of the UK. If you do not give the necessary notice (with the correct dates) then the lodger may continue to reside at your property, causing all sorts of problems. As a landlord you must give written termination notices, setting out the tenancy end date and the reason for termination. If you are lucky your lodger will pick up the notice, but if they do not then there will be no option other than to make a claim for possession yourself. In times like these, a tenant will actually pray for an employment tribunal hearing in which they are unlikely to be out of pocket, as opposed to your position as a private landlord . It is also important that your notice of termination is correctly dated. Take it from me, most landlords struggle with this regardless of whether the notice is a termination notice or a notice requiring possession. The easiest way to work out the dates of the notice period is to simply take the end date of your lodgers licence, add the necessary notice period to it and count backwards to the last possible date when you can deliver the written notice. The other area where complications may arise is the negotiating process. Many landlords wait until the last minute before their lodger licence is due to expire before serving the notice. Unfortunately, any agreement on moving out and the return of possession will be as difficult as keeping a toddler in a garden without a fence. We advise landlords to give at least 3-4 weeks notice to the lodger, so that negotiation can take place in an organised fashion and the lodger can target their search for a new property. Obviously the sooner you serve the notice, the better.