What to consider when you take on a lodger

You may need permission to take in a lodger, depending on your circumstances. Let your home insurance company know what you plan to do. If you have a mortgage, you will need to inform the lender. Check your lease if you are a long leaseholder, or ask your landlord for permission if you are renting a property.

Also, find out if your 'Single Person Occupancy' status on your Council Tax will be affected (if relevant). It's also essential to make sure that your property is safe (which is necessary for your own benefit, as well as anyone who comes to live with you). This includes your gas and electrical fittings and appliances, knowing the best ways to protect your home against fire, and ensuring the safety of your furniture, furnishings and the building itself.

If you're going to be sharing a house with someone, you'll want to be confident that your lifestyles are fairly compatible. When interviewing lodgers, it's a good idea to ask them how much time they'll be spending in the house. Find out how they intend to spend their evenings, what hobbies they have, and when they would want to use the kitchen to get meals (if you're not going to do this for them).

Run through your house rules and check that they would be happy to stick to them. Ask yourself if you'd feel comfortable having this person living with you? When you feel happy that you have found the right person, ask for references from their bank or building society and their previous landlord. Phone them for a quick chat to verify what has been said in the written statements.

Even if you are renting a room out to someone you know, it's best to have a formal written agreement. State how much deposit you need (this is usually a month or six weeks rent equivalent), how much rent, when it's due and how it is to be paid. (If you're unsure about how much to charge, find out about the cost of similar lodgings in your area).

The agreement could also have some provision for rent review and increases, for example on a yearly basis. You should state how much notice to leave is needed by either party, what meals and other services are to be provided, what you are both expected to pay for (how you will split bills for example), and which rooms and facilities your lodger is permitted to use.

Make an Inventory Agreement for the lodger's room before they move in, to make any questions over whether the full deposit should be refunded on moving out more straightforward.

Find out how you could benefit from the Rent a Room scheme by logging onto the Inland Revenue website.

If you have home insurance with Churchill, tell us about your change in circumstances and ask for advice about updating your cover.

As long as you take all the necessary precautions, having a lodger could be a positive experience for all concerned.

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