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Right to rent: Making sure you’re compliant

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The right to rent legislation introduced in February 2016, means that all landlords now need to check their potential tenants’ right to rent a property.

These measures are part of the Immigration Act and were put in place to eradicate landlords renting to multiple people, therefore creating poor living conditions.

Anyone letting a property in England must check the rights and identities of all potential tenants. So, if you’re a landlord, follow our right to rent guide before you hand over those keys and make sure you’re compliant.

Who do I need to check?

You must check all prospective tenants aged 18 or over before you create a tenancy agreement. Remember to check all of your tenants that fall into this category – it is against the law to only check people you think are not British citizens.

If the tenant has a restriction on the amount of time they’re allowed to stay in the country you need to make your checks within a certain timeframe. In this instance, your checks need to made within 28 days of tenancy commencement.

Follow this guide for checking Commonwealth citizens with incorrect documents, as they may still be able to rent your property.

Gov.uk guidelines state you don’t need to make a right to rent check for tenants living in the following:

  • Social housing
  • Care homes, hospices or hospitals
  • Hostels or refuges
  • Mobile homes
  • Student accommodation

There are many factors to be aware of, so it’s a good idea to become as clued up as possible to ensure you don’t trip yourself up.

How do I carry out a right to rent check?

  • Find out who will be living in the property
  • Gather the accepted documents that allow their UK residency (must be original)
  • Check over the documents with the tenant or tenants present
  • Make copies of the documentation you have been provided with and keep them on file

Accepted single documentation includes a UK passport, an EEA or identity card and UK immigration status documents with unlimited leave.

If your prospective tenant doesn’t have any of the single accepted documents there is also a list of accepted document combinations to look over.

This Home Office user guide details all possible accepted documents and document combinations – consult this to avoid any grey areas.

What will happen if I don’t follow the right to rent legislation?

The penalties are tough for illegally renting to a tenant – you could go to prison for five years or receive an unlimited fine.

You are liable if your tenant didn’t have permission to stay, or even enter the UK in the first place, if their leave expired or if their papers were illegitimate.

This is why it’s so important that you conduct your checks in the proper way and also further protect yourself by keeping copies.

Find a full rundown of the fines and penalties associated with illegal renting here.

Further help

There’s help at hand if you’re unsure whether the documents you’ve been provided with are legitimate, or if you have any further questions.

You can receive advice from the landlord’s helpline set up by the government via 0300 069 9799. This line is open Monday to Thursday from 9 am to 4:45 pm and on a Friday from 9 am to 4:30 pm.

Now you know all the basics of what makes you compliant, you’re ready to rent out a room. Check out Badi to find out where to start.

Tenants rights: What tenants need to know

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As a tenant living in privately rented accommodation, you have rights. It’s important you’re aware of these, as well as the responsibilities it’s equally important you uphold.

In this helpful guide, we’ll cover tenants rights in the UK to make sure you’re aware of what you need to know before you sign your tenancy agreement.

Your rights as a tenant

If you respond to a house or flat listing and the advertiser is a ‘live out landlord’ or is an agent then this person will be managing your tenancy.

While we’re on this point – if you are renting through an agency, you have the right to know who your landlord is. You can request this information from your point of contact and your landlord is required to provide this information to you within 21 days. If you are not provided with this information in this period of time, your landlord can be fined.

All tenancies commenced from 28 February 1997 have automatically been an Assured Shorthold Tenancy or AST. To ensure you and your landlord or agent are both comfortable and happy with terms and arrangements, you will have a tenancy agreement document.

If you live in England, you should be provided with a copy of the how to rent guide and if you live in Scotland a tenant information pack should be given to you.  

If you have a tenancy then it should be compliant with the law and also be fair. This agreement should be co-signed by both you and the landlord before you move in to ensure you are provided with your rights as a tenant.  

The tenants rights are as follows:

  • To live in a property that is safe and in a decent state of repair.
  • To have your deposit returned to you when your tenancy finishes. This is clearly providing you meet the requirements of your agreement. Your deposit should also be protected via a scheme by your landlord during the term of your tenancy.  
  • To have the ability to challenge any charges you deem to be ‘excessively high’.
  • To know who your landlord is (details as above).
  • To live in the property undisturbed.
  • To see an Energy Performance Certificate for the property you are renting.
  • To be protected from unfair rent prices and eviction.
  • To have an agreement in writing if you have a fixed-term tenancy of over three years.

Your responsibilities as a tenant

While you should be well versed in what your rights are as a tenant, you should also be aware that you have responsibilities to uphold during your tenancy. Carrying out your responsibilities is vital, because your landlord has the legal right to evict you should you breach your agreement.

Your responsibilities as a tenant are as follows:

  • To take appropriate and thorough care of the property.
  • To pay the rent as agreed – this is the case even if you are in dispute with your landlord for any reason or you are awaiting repairs.
  • To pay other bills or charges as were agreed with the landlord (utility bills, Council Tax etc).
  • To pay for or repair all damage caused by you or any guests.
  • To only sublet the property if it has been agreed with your landlord or if the tenancy agreement states you are allowed to.

Additionally, and as previously stated, you do have the right to live in the property undisturbed, but you must allow the landlord access for inspections or maintenance repairs. During your rental period the space is yours, so from their side, they must give you a notice period of 24 hours for these kinds of visits.

Any planned visit must also obviously be at a reasonable or acceptable time of day, too. If the situation is an emergency, the 24-hour rule clearly needs to be relaxed.

As long as you follow the above guidelines and don’t breach the terms of your tenancy agreement, the landlord can’t evict you during the term of your contract.

Hopefully, our tenancy guide has provided you with the information you need. You should now know your rights as a tenant, what you are responsible for and also the documents you should be provided with when you commence a new tenancy.

What to charge for your spare room in London

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Do you have a spare room going in your London house or flat? If you have, you may be considering a move towards getting a lodger. This means sharing your space and earning yourself some money in the process.

It’s difficult to know where to start when it comes to deciding what to charge for rent and what to include in the package. So if you’re a potential landlord in the UK with a property in London asking yourself ‘how much rent should I charge?’ then we’re here to help with these hints and tips.

Data gathered from the last two weeks in November and first two of December 2018 shows we received over 25,000 accommodation requests per week – if you have a room going spare this shows the demand is definitely there!

What are other landlords charging?

If you’re wanting to rent out your spare room, this is one of the first questions you’ll be asking yourself and it’s obviously important. The best way to know what to charge is to do a little bit of research into what other landlords are charging in your area.

Make sure you’re considering the size of the room and the facilities that will be available to your tenant, both within your home and in the local area when calculating what your rent should be.

Do you have good transport links nearby? Is your home conveniently placed for grocery shopping? Think of the bigger picture when pricing your room and it will ensure you are charging a fair amount to suit both you and the lodger. As a guide, current listings in London are being advertised at around £800 per month.

What to include?

Will you be including bills in the overall price of the rent? Bear in mind that people do gravitate towards listings that offer all-inclusive bills, as it allows them to predict their outgoings far more accurately. Remember to keep in mind the associated additional costs that come with having an extra person in your house.

Bills will be higher (more washing, increased water and electric use etc) and be aware of insurance, wear and tear, repair and maintenance costs. You want to offer a good deal for your tenant, but you also want to ensure this new venture doesn’t actually leave you out of pocket! Do some calculations to forecast the overall situation and account for all these additional costs.

How and when?

First, whether you choose to charge weekly or monthly rent, getting your tenant to set up a standing order is the recommended method for payment. This saves both you and your lodger from relying on memory to give/take cash, you both know when the money is coming out of their account and into yours. For peace of mind you also both have a tracked record of payments in the form of bank statements.

It’s also key to have a good relationship with your lodger, you don’t want to get yourselves in a situation where you’re chasing for rent and causing tension. It’s worth talking through with your tenant their circumstances before they move in – if they get paid weekly, they might prefer to then pay you each week, but if they get paid monthly, weekly payments could be more of a struggle.

Most people are paid monthly, so it may be easier for you both to offer a monthly package rather than fiddling around with calculating weekly rent. Remember the first rental amount plus a deposit should be paid up front before the tenant moves in.

Helpful profiles

Data gathered from our London listers and users has also provided us with some helpful profiling information to share with you. The average age of listers in London is 32, while the average age of users (seekers) sending requests in the city is 27 years old.

Hopefully, you now have a great idea of where you’re placed in this bracket and what rent to charge, how and when. Also the age groups you’re working with plus the characteristics and interests of people you’ll potentially be welcoming into your home. The main points to remember are to be fair and honest at all times, do your research and work with your lodger from the beginning and you’ll create a great living environment.

How to end a lodger agreement in the best way

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This can clearly be an extremely tough and uncomfortable situation to approach, especially if your lodger is settled in. Sometimes the situation is unavoidable, though, even if there’s been no conflict and they’ve done nothing wrong, so we’ve put together these pointers to help with how to end a lodger agreement in the best way possible.

Have a chat

Firstly, if you’re experiencing issues with your lodger, the best and most straightforward thing to do is simply talk to them. Notes left on the fridge or words whispered in the hallway won’t help and rather than improving the situation will probably make things much worse. Organise a time to sit down together and have a calm chat to see if you can iron out any of the problems first.

No one wants to have strained relationships, and even if the situation ends with you working out how to terminate a lodger agreement, it’s always best if these things finish on good terms. If this doesn’t work then get it down in writing with a letter, and another more formal note if the first one doesn’t adjust behaviour. Also make sure you keep copies so both you and your lodger have a future reference point.

Notice

If the situation can’t be resolved, you will now need to move onto the next stage. So, how to evict a lodger? You will first need to serve a notice.

This will be an uncomfortable situation, no matter the scenario. But there are ways of doing this to make it feel less harsh. Leaving the letter in an envelope stuck on their door will clearly leave a sour taste, and could also give the lodger the opportunity to say they never received the notice. Making them a cup of tea and having a chat about what the letter says and explaining the situation may mean they will be more likely to leave in the timeframe you have laid out for them. If it feels appropriate, arrange a third party to be present when you hand the notice over, so you both have a witness. Also keep a record of all the paperwork you share with your lodger.

In all honesty, you can ask your lodger leave whenever you want. It’s not the same as a tenancy with an AST contract, in which case there may be a fixed period in which the tenant is secure. Check your lodger agreement (for future tenancies, take a look at our guide on what a lodger agreement should include and please remember to keep a record) and follow what’s stated there to make sure the circumstances remain fair for all parties involved. Take a look at this Landlord Lodger guide for more help with serving notice to your lodger.

Keep communicating

In most situations, the lodger will understand, respect your decision and move out with minimal fuss, but this isn’t always the case. Even if your lodger has displayed bad behaviour, remember this may be because of a situation happening in their life. Keep an open channel of communication, and be as understanding as possible.

If it looks like they may outstay their notice, have a quick chat before the date. If they genuinely need a couple of extra days to gather themselves and get sorted then grant this, but don’t accept any further delay to the agreement. Have an honest conversation so you both understand the current situation.

Eviction

If a lodger is refusing to budge, that’s when you, unfortunately, need to know how to evict them and abide by the rules in place in England. The most important thing to remember is not to use any force, this situation needs to be as passive as possible. If they refuse to leave then arrange to have the locks changed when they are out of the property and don’t allow them back in when they return. They are allowed to retrieve their belongings, but only allow them into the house to pack with a police presence.

If you’ve followed the previous steps and therefore kept things as friendly and fair as possible, hopefully this final point will come as an absolute last resort. If you need any further help as a resident landlord then this gov.uk guide can help, and if you’d like to read your rights as a lodger, this Citizens Advice page of information has everything you need to know.

What a lodger agreement should include

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Thinking of taking on a lodger? Lock it down with a detailed lodger agreement and the process will run a whole lot smoother. An agreement gives you and your new housemate something to refer back to, should questions about the terms arise. If you’re not sure where to get started, keep reading this guide and learn more about what a lodger agreement should include.

House rules

It may seem a little extreme, but including house rules in the agreement itself is always wise. Let’s face it: nobody wants a house that smells of cigarette smoke or to be woken up by your lodger’s pals stumbling through the door at 3 am.

While you should accept that everyone wants a night out now and again, you should specify what is and isn’t allowed at the property to avoid future conflict. From coming home quietly to putting a stop on pets, include everything the lodger can’t do at the property so they know if they’re the right person to live with you. You’ll thank us later!

Using badi to advertise your space is a great way of filtering out those who won’t match your house rules. This gives you the chance to specify if the property is smoker friendly, whether couples are accepted and any rules regarding pets.

Obligations

Similar to house rules, an obligation section lets the lodger know what they are expected to do when they move in. Have a chat with the potential lodgers beforehand to check that they’re happy before getting them to sign on the dotted line.

A lodger’s obligations typically include:

  • Paying rent before/on the date shown in the agreement.
  • Keeping all communal areas clean – you may want to put a rota style agreement together if you plan on doing chores together.
  • Keeping their bedroom clean.
  • Any jobs or chores that will be solely theirs to complete.
  • Keeping their personal items safe and secure.

It may not be fun and games, but it’ll stop your new roomie from accidentally slacking on their chores. Putting their obligations out there will help things go smoothly because you won’t be able to argue about whose turn it is to do the washing up.

You should also mention the rules regarding their deposit and the penalties for not paying rent or damaging property.

Rent and bills

Most important of all is how much money they’ll be expected to pay and how long the contract lasts. Remember to specify if bills are included in the total price of rent or not. If not, it may be a good idea to include an estimated sum for the bills as well as the rent. That way, you can avoid any confusion and keep organised by referring to the contract.

Once you’ve decided how much to charge your lodger, you’ll need to decide when and how often rent is due. You can charge them monthly or weekly, although you’ll have to provide a rent book if you decide to go with the latter.

What’s included

Are you planning on cooking meals for your lodger? Are bills included in the total price of rent? Will the lodger be expected to pay for any extras? If so, you’ll want to include it in the agreement.

Anything that is included in the total price should be included, whether that be you changing the bed sheets every morning or if the lodger is chipping in for some of the household luxuries. This section is similar to the lodger’s ‘obligations’ section but it is the landlord’s side of the deal.

If you’re still looking for your perfect lodger, don’t forget to check out badi. Our app makes finding a new housemate super simple, fast and fun, thanks for the many handy features.

What does live in landlord mean?

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From making new friends to having the potential to earn £7,500 tax-free, there are plenty of benefits to reap when bringing someone new into your home. If you’re thinking about taking on a lodger, it helps to get your head around the lingo before getting stuck in. Confused as to what a live-in landlord is and if you count as one? Keep reading our handy guide to learn more about what being a live-in landlord means for you.

What is a live-in landlord?

Just like it says on the tin, live in landlords quite literally live with those renting a room in their property. The rented property is the homeowner’s main or only place of residence and they must be living there on a regular basis. Live-in landlords have lodgers rather than tenants and typically share communal areas with them.

It’s important to note that those who rent out purpose built flats only count as live-in landlords if they live in the same flat. Those who live in another flat count as live-out landlords according to the Gov UK website.

What is a live-out landlord?

You may have already guessed, but a live-out landlord is one that lives separately from their renter, who is known as a tenant in this case. If you’re renting out a holiday home or your own property while you’re away, you’ll count as a live-out landlord as it’s no longer your main place of residency.

Why does it matter?

You may be thinking: what difference does it make? Quite a lot, actually. Those with live-in landlords have totally different rights to those who with a live out landlord:

  • Lodgers have licences or agreements, whereas tenants would have tenancy agreements.
  • You can only evict tenants after the standard notice period shown in their contract. Lodgers can be served a reasonable notice for eviction, which is typically 28 days.
  • A live-in landlord can access the lodger’s room whenever they want and locks aren’t allowed on bedroom doors. A live-out landlord must give at least 24 hours notice in writing before they can access the property.
  • A tenant’s deposit legally must be placed in a Deposit Protection Scheme. Although it’s a good idea that a live-in landlord does this for security reasons, it isn’t a legal requirement.
  • Both types of landlord will need to keep up with safety and security checks, including yearly gas checks.

It’s important to know what type of landlord you fall under in order to make sure you’re keeping on top of your duties. Live-in landlords can make £7,500 totally tax-free from renting out their spare room thanks to the Rent a Room scheme. If that doesn’t tempt you into renting out your spare room, we aren’t sure what will.

Whether you’re a live-in landlord to be or a potential lodger, badi can make the renting process a whole lot smoother. Enjoy the plethora of fun and functional features on offer while you find the right person to share your space with.

Top ideas to make extra money

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We could all do with some extra cash in our pockets from time to time. With unforeseen bills and expenses, birthdays, Christmas and the rising cost of living, it’s always nice to have a reserve to help, or even to pop in a savings account. Take a look through these ideas to make money from home and spark some inspiration for your new project!

Rent

Do you have a spare room? You could consider renting out your space and become a resident landlord. The gov.uk says you could earn up to a whopping £7,500 a year tax-free with the Rent a Room Scheme. So this is a fantastic idea to make money from home and without a lot of effort – one definitely worth thinking about! If you live near an airport or train station and especially if you live in a city you could be sitting on a little goldmine. If you have a spare room available in a desirable area, you’ve just found a way to make extra money for yourself. Use badi to advertise and find the right lodger for your spare room.

Sell

If you want to make money from home in the UK then first look at your belongings, as you have lots of options. Just like having a money making space, you could also have money making items right under your nose. Do you have drawers, cupboards or shelves filled with old mobile phones, CDs, DVDs, books, or games that you haven’t even thought about, let alone used, for ages? There is a fantastic range of websites where you can recycle or sell your bits and bobs for cash. Mazuma, musicMagpie, envirofone, Amazon Marketplace – the list goes on – get researching to work out how your spare items will generate you some much needed extra money.

Online

There are all sorts of ways to make extra money online, so this point covers a few different topics. Below are the best options for you to have a think about:

Surveys

You could generate a nice little income by filling in online surveys in your spare time from the comfort of your sofa. If you sign up and fill in surveys for a number of different companies the amount of money you make will also increase. A couple of great sites to join and get you started are MySurvey and Swagbucks.

Review apps and websites

This is one of the top ideas when it comes to making money online. It’s super quick and easy (some only take 20 minutes to complete) and if you start at the beginning of the year you can gather a great amount of extra income. UserTesting is one of the best websites to set you off on your way to money-making success!

Cashback

If earning a bit of cash without leaving your house appeals to you, you’re onto a winner here! Do you do a lot of your shopping online? If so, register with TopCashback (choose the free membership) or Quidco (choose the basic membership) and earn as you go. Remember you’re also spending with this one, so only use it when you need to and don’t go crazy.

Hopefully, we’ve helped point you in the right direction with our top money making ideas and you’ll soon be well on your way to filling your piggy bank!

Badi raises $30M in Series B funding to lead the way in reshaping the rental market

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-Unaffordable housing is a 21st-century global issue. As demand from ever-growing urban populations and fragmenting households fast outstrips supply, badi comes in with a smart solution to unlock available rooms through Europe.

-Badi has hit over 12 million room rental requests since first launching in 2015.

-The funding is being led by Silicon Valley VC Goodwater Capital, making its first investment into a Spanish startup along with Target Global and returning VCs Spark Capital and Mangrove Capital.

Barcelona, January 10, 2019: Badi, the leading room-rental marketplace that makes city living accessible, has today announced a $30M Series B, led by Goodwater Capital, a US-based consumer tech VC firm that previously invested in companies like Spotify, Twitter and Facebook. This new round will bring badi’s funding up to $45M.

In this last round, Shmuel Chafets from Target Global VC has also participated along with returning VCs Mangrove Capital and Spark Capital.

Additionally, Tao-Tao, COO of one of the booming German tech companies GetYourGuide will be joining badi’s board which is currently formed by Alex Finkelstein from Spark Capital, a prestigious US venture firm that previously has invested in companies like Slack, Oculus, Coinbase & Twitter; Nikolas Krawinkel from Mangrove Capital Partners, one of Europe’s most successful VCs who has invested in Skype & Wix.com, Didac Lee, an outstanding Spanish entrepreneur and Carlos Pierre, CEO of badi.

Real estate is the largest commodity in the world, with an estimated $217 trillion valuation. Home ownership in Europe has collapsed within 20 years, so more and more people are looking for non-binding and flexible accommodation option. However, the offering is not responding to demand, which is why the price of rents are continuing to increase.

Badi has already championed London as one of the most important cities to invest in, largely due to it being continually named as Europe’s most expensive city to rent over the past few years. Badi has already seen success in Spain for the same reasons, as the rental market has grown by 130% in the last 10 years and represents 23% of the entire real estate industry, making Barcelona and London a huge focus for the room rental marketplace.

Paris, Berlin and Rome are also strongly on the brand’s agenda thanks to their constant growth, size and high rental prices. Currently, private rentals represent 21% of Rome’s market, 23% of Paris’ market, and 40% of Berlin’s market, highlighting the demand for badi’s sophisticated solution. The Series B funding will allow the company to continue to further expand into all of these leading European markets and make smart-city-living a viable option.

The new capital will enable the company to consolidate its services in Barcelona, Madrid, London, Paris and Rome and open new markets in major European cities starting with Berlin. The investment will also be used to expand the core team up to 100%, open new offices in London and develop new extra services to make the life of landlords and tenants easier.

Badi sets itself apart as an end-to-end platform that connects landlords with room seekers by using AI. The brand has already hit 12 million rental requests since launch and is not stopping there – badi is on a mission to become the world’s largest and most innovative real estate marketplace, kicking-off the 2019 with Series B!

How to find a lodger: 5 things to think about

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Not sure how to find a lodger? Read these tips from badi on the five things you should consider before kicking off your search and getting an advert online.

There are plenty of benefits to taking on a lodger; not only do you get to make a new friend, but you can also earn up to £7,500 tax-free. Don’t just jump straight into advertising your room though, there are plenty of things to consider before putting a notice out to find your lodger. Not sure how to find one? Here are five things to think about when trying to find a lodger…

Does personality matter?

It may sound obvious, but you should really think about the type of person you want to live with before you advertise. You may think that it doesn’t matter as long as they keep the place in good condition, which may well ring true if you spend a lot of time out of the house. However, most of us will want to get along with our lodger. Before looking at how to get a lodger, you’ll need to decide the type of person – or persons – you’d feel comfortable sharing a house with.

Creating a checklist or profile of your ideal lodger is a great way to start the entire process. Consider their personal habits and if you’re willing to put up with them, such as smoking or noise habits. Other things to consider are age, gender and if you’d take on a couple as well as laying down some ground rules.

Wording the advertisement

The advertisement itself has a huge impact on the type of people who apply. As mentioned above, don’t write your advert before considering the type of person you want to apply. Some of the information will have to be included regardless, including the size of the room and the details of the property.

Other aspects can be targeted to suit the preferred applicant. For example, if you’d prefer a student lodger, you can mention how far of a walk it is from the nearest university or the local nightlife. You might also want to include generally useful information, such as transport links.

Do I need to declare a lodger?

In short: yes. There are a couple of organisations that you should contact about your plans before you begin looking for a lodger. While many mortgage agreements allow you to rent out a room, it’s always good to give them a call to double check and fill them in on the details.

As well as your mortgage provider, you’ll have to notify your insurance company to ensure your current policy covers a lodger. You’ll definitely have to update your council tax too, so ensure that’s updated for their move-in date.

In accordance to the Rent a Room Scheme, you can benefit from £7,500 of tax-free income from a lodger.

Benefits of having a lodger:

  • Money: you can earn up to £7,500 per year tax-free thanks to the Rent a Room Scheme.
  • Safety: Having more people in the house can improve safety, especially if you were previously living alone.
  • You make the rules: While it’s a good idea to be open to compromises, you own the property and can, therefore, make the ground rules. Make sure you discuss the major points before they move in and be open to discussion.
  • New friend: You can make new friends, especially if you choose someone who you have something in common with.
  • Housework: As well as getting extra income, you can get some help around the house.

Deposit or no deposit:

There are a few financial factors to consider before beginning your search. While it isn’t required, it’s always a good idea to get a deposit before your lodger moves in. This way you can ensure any damage they cause to the property can be paid from this and you have some cover if a problem occurs.

The typical amount is about one month’s rent, although it’s up to you how much you ask for. Unlike a tenant, a lodger’s deposit doesn’t have to be secured in a tenancy deposit protection scheme. However, it’s still important to keep this safe.

Now that you’ve considered some of the key points of getting a lodger, why not use badi to advertise your room? Our advanced AI technology and secure in-app chat makes the entire process incredibly easy. .

Rent a Room scheme: How much can I charge a lodger without paying tax?

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Landlords can earn up to £7,500 tax free with the Rent a Room scheme. Keep reading to find out who is eligible and how much you can charge your lodger.

Thanks to a revision of the Rent a Room scheme, taking a lodger on board has never been more beneficial. Not only do you gain a new housemate to socialise with, you can earn some extra cash by charging rent, with £7,500 of this money being completely tax-free. You can enjoy meeting new people and reap the rewards just by making use of an empty room. Sound good? Keep reading to learn everything you need to know about the Rent a Room scheme.

What is the Rent a Room scheme?

Introduced in 1992, the Rent a Room scheme is for those who rent out a furnished room in their main home. Renting out storage doesn’t count in the scheme, nor does renting out anything other than living space. You’ll only be eligible if the room is part of your main or only home at the beginning of the let – and the room must be furnished.

Those who let out their property solely while they are away – such as when going on a short-term holiday – have been eligible the Rent a Room scheme in the past. However, a possible rule change may occur in 2019 that no longer allows this type of let to fall under the Rent a Room scheme. Landlords don’t have to worry too much – you’d still be allowed to go on holiday, this just means that you live at the residence most of the time.

How much can I charge a lodger without paying tax?

Good news for people with a spare room – you can earn up to £7,500 per year absolutely tax-free. This is only reduced if another person receives income from letting out the same property, such as your partner or a joint homeowner. In this case, the Rent a Room scheme allows each person to earn £3,750 tax-free from their lodger.

This figure includes:

  • Any money you receive for services such as cleaning, meals and laundry
  • Balancing charges
  • Rental income before expenses

How much you charge your lodger is up to you, but it’ll only be tax-free below the threshold. There are plenty of ways to find out how much to charge, such as using badi to check the prices in your local area to gauge the going rate in your market.

How do I opt into the scheme?

To opt-in for the scheme, you should let HM Revenue & Customs know this on your tax return. As long as you don’t go over the £7,500 or £3,750 yearly threshold, all the money you earn from a lodger will be tax-free.

According to GOV.uk, if you earn more than the threshold, you have two different options:

  • Method A: Paying tax on your total income – disregarding the threshold – minus your expenses.
  • Method B: Paying tax on the profits above the threshold, without deducting expenses.

Even those who go over the threshold can benefit from the scheme, just make sure to keep organised and keep track of your receipts and get professional advice if you are not sure.

With a number of fun filters and an easy to use in-app chat, badi makes it easy to find the perfect lodger. Check out our badi and start your search today.