Hello Mike,
I’m getting Universal Credit, that includes a Housing Costs Element.
This doesn’t cover my full rent.
I asked my landlord about getting a lodger and they are fine with that.
If I get a lodger, will the rent that they pay to me affect my Universal Credit?
Will my lodger be able to claim Universal Credit to cover the rent that they have to pay to me?
Can my son be the lodger?
Darren.
Hello Darren,
Having a Lodger
If you are being bedroom-taxed (social renters) or your local housing allowance does not cover the full rent (private renters) having a lodger or boarder can be a really successful way of making some extra income to deal with this.
As you have already done, you must get permission from your landlord.
Although it is not legally necessary, you should create a written agreement.
This doesn’t have to be full of legal language – just a basic list, signed and dated by both of you, that says how much the lodger will pay, what they get for this money, and any other house-rules.
Recieving Rent Income From A Lodger
If you receive rent income from a lodger and you make less than £7,500 per year, this will come under HMRC’s rent-a-room scheme.
The rent that you receive will not be taxable and Universal Credit will not count it as part of your income.
Winner! Up to £144 per week with no effect on your benefits.
Can the Lodger Claim Help To Pay This Rent?
Yes, absolutely.
So long as your arrangement is a commercial one, Universal Credit (or Housing Benefit if they are over Pension age) can cover the rent that your lodger has agreed to pay you.
This is one of the reasons that you will need a written agreement – to demonstrate to UC that the arrangement is a commercial one.
Your lodger will count as a private renter (you are their private landlord) so the usual Local Housing Allowance limits will apply to the help they get.
Can My Son Be The Lodger?
Yes, but Universal Credit will not accept this.
If you live with and rent from a close relative (parent, sibling, child or step or in-law version of these) the law of Universal Credit says that this rental agreement does not count.
Instead your son would count as your non-dependant and he would not be able to claim anything for the rent that he has agreed to pay to you.
Having a non-dep has two different effects that act in different directions:
- Having a non-dep can increase your Housing Costs Element – because UC now thinks that you need an extra bedroom.
- Having a non-dep can decrease your Housing Costs Element – because many non-deps are expected to make a contribution to the rent of the person that they live with.
More details of non-deps here.
If You Were Getting Legacy Benefits
If you were getting Housing Benefit instead of Universal Credit, having a lodger would be much more convoluted and much less helpful.
The benefits system would count most of the money that you receive from the lodger as part of your income.
This would usually make it impractical.