Do you know your lodgers from your tenants? Some landlords use the words interchangeably, but there are many differences to be aware of…

Like many landlords, you might use the words ‘lodgers’ and ‘tenants’ interchangeably when describing people renting property from you. However, these two words actually have different legal meanings and insurance implications.

The main difference between a lodger and tenant is that a lodger (legally known as a ‘licensee’) is someone who lives in the same property as you. In this case, you are classed as a live-in or resident landlord. Tenants, by contrast, are people who pay rent for a property you own but don’t live in; in this respect, you’re classed as a live-out landlord.

But, there is an exception to the rule: If you’re a live-in landlord but don’t share living space with the person renting from you (apart from a shared hallway), they’re actually classed as a tenant and not a lodger.

Whether you have lodgers or tenants, here are some things to be aware of:

Tenant rights

Tenants have more rights than lodgers and rent property from you under a tenancy agreement, which covers areas such as tenant and landlord obligations, rental price, and the start and end date of the tenancy. Examples of tenant rights include the right to know who the landlord is, to live in a safe property that’s in a good state of repair, and to challenge excessively high charges.

Lodgers, on the other hand, rent under a licence and have fewer rights. For instance, you’re able to give lodgers ‘reasonable’ notice to leave your property, which is typically 28 days. It’s important to set out your terms and conditions with a lodger before they move in.

Living rights

If you want to visit a tenant’s property, by law you must give them notice unless it’s an emergency. However, you can legally enter lodgers’ rooms without giving them notice; you shouldn’t let them put a lock on their rooms unless you have a key.

Deposits

The most common type of tenancy is an Assured Shorthold Tenancy (AST), which entitles tenants to have their deposits safeguarded under a protection scheme. You don’t have to protect lodgers’ deposits under a scheme, though you can choose to.

Legal responsibilities

Landlords dealing with tenants have a long list of legal responsibilities. A few examples include your obligation to rent properties safe and free from health hazards, install and test smoke alarms and carbon monoxide alarms, provide an Energy Performance Certificate for the property, and ensure gas and electrical equipment is safely installed and maintained.

While it’s still important to ensure your property is safe for lodgers to live in – for instance by having gas and electrics checked regularly – the legal obligations are far less stringent.

Insurance

If you’re a live-out landlord with tenants, then you’ll need to acquire specific landlord insurance. However, if a lodger is renting a room from you then you’ll need to think about taking-out tenants’ contents insurance, which will protect their possessions against theft and damage. Either way, seeking help from an insurance broker will help you to find the right policy at an affordable price. For more information give us a call on 01132500377.