To charge my lodger more?

[PeanutOil11]

Hi Everyone,

Cross-posted from Money Matters for traffic

I got a lodger in about seven months ago and am charging a set monthly rent that includes all bills. In hindsight, the amount I am charging is a bit low, but just wanted to get someone in at the time and wasn't thinking :/ Got the lodger, as need the extra money for bills, mortgage, etc. Anyway, my energy bills (as will be the case with everyone) are shooting up in a month or so's time when my fixed tariff ends. Is it reasonable to ask my lodger to pay more? How would you approach this conversation? He is on a monthly rolling agreement. I want to approach this sensitively and fairly.

Thank you for your advice :)

I'd discuss the situation with him, he may be short of money himself and prefer to limit use or he may not want the hassle of moving/working in a coat and be happy with an increase. Personally when I had lodgers I didn't increase the rent while they were living with me, but I didn't face any huge bill increases. 2 people living separately in a house does cause a much bigger jump in utilities usage than a couple (2 sets of dinner cooked, 2 bedrooms lit and heated etc)

@Ponoka7 Agreed. Definitely need to get the figures right and be clear on the rationale for an increase.

@Konstantine8364 Precisely. The increase in energy prices is unprecedented. I would never normally increase the rent.

I Have experience of renting properties but not lodgers. What you have to look at a) how happy you are with your lodger and b) the amount of time it will take to recoup the costs if your lodger says no and leaves.

On the rent of £400 pcm, it will take you about 5 months to recoup the extra £40 a month based on the room being vacant for only 2 weeks. Does does the risk outweigh the reward? You will have to give him a month’s notice for any rent increases. So this takes you to 8 or possibly 9 months in your home.

YANBU to want to increase the rent and are within your rights. But if you’re happy with this person, I would wait until they’ve been there just under 11 months, explain you have thus far borne the price hikes on fuel but it is untenable to continue and add an appropriate amount onto the rent. You should also check the going rate for a similar room before doing this.

I have long term tenants in some properties and I value their business so I keep them a minimum of 10% below the going rate. This keeps them happy and less likely to want to move. It actually makes very little difference to the bottom line due to void months and other on costs. Just something to consider.

@Ponoka7 but the 10% is on his total rent cost, its not 10% increase of the fuel bill.

£440 bills inclusive is still an amazingly low rate. I suspect he will know he is on to a good thing anyway and won't mind anyway.

Of course you should charge him asap.

Tell him the price will increase from 1 Feb..

Don’t wait for 12 months to be complete, that’s bull. He’s nit a tenant, he’s a lodger.

I don't think you need to worry about this too much. You said is £400 now and you're thinking to charge £440. I can't imagine anyone would want the costs and hassle of moving for £40! Particularly as you seem to think he earns well and could easily afford something better. BUT people aren't always rationale and he may be affronted and might be the tipping point to look for something else. So you find someone else (who is ideally cleaner - could be a win-win). I'd suggest be clear on what you want, give reasonable notice and explain the rise due to increasing energy costs. I'd suggest ask about his longer term intentions and explaining yours as part of same conversation. I.e. if you want someone long-term give him that peace of mind and you could agree that you you'll keep rent at that level for next 6 months for example.

“ In hindsight, the amount I am charging is a bit low, but just wanted to get someone in at the time and wasn't thinking :/”

So it’s not really energy bills is it, that’s just a handy excuse. You messed up. A 10% increase in someone’s housing and living costs every few months is completely unsustainable.

@MsMarch

If I had my rent increased after just 7 months, I'd be pretty angry. I think at 12 months you can increase it. If necessary, more than would be ideal but if you can highlight and show increased costs, then you might get away with it. Or the lodger might tell you to get stuffed.

And then he can try to find somewhere at the actual market rate.

And then he can try to find somewhere at the actual market rate.

Yes. Sounds like an absolute bargain, especially as it's all inclusive, even with the rise in rent.

@Mummyoflittledragon Very useful. thanks. I think that's a sensible approach.

@JenniferAlisonPhilippaSue So what if that is the reason? It's not, but if i'd decided it's too cheap then I have the right to ask for an increase. If my energy bills are doubling then even more reason to do so.

Thanks, @ChampagneLassie. Agreed.

@NeverDropYourMoonCup Yes, exactly. It's prob around £100 cheaper than it should be.

As you have to give a months notice on increased price I would wait until 11 months then increase. Do your SS first and work out how much he costs to keep. Then add on your profit for trouble. Only 1 price increase in 12 month period so get it right OP.

If it’s £100 cheaper than it should be, that’s 20% under market rate and I would increase by more than £40 just before the 11 month rental due date. 10% less than going rate is £450. But you should have been at or close to market rate to begin with really but your tenant may walk if you ask for a full £100 more. However, by this time, rentals may have increased again. So you’ll have to take a view.

As caringcarer said, you only get one chance every 12 months so you should get it right.

10% is a massive increase in rent especially after a fairly short tenancy. As a tenant I am not sure I could manage a 10% rise, its way above the rate of inflation / wage growth. How easily could you absorb a 10% rise in your mortgage?

I think a rent increase is fair enough as fuel bills are going up. If he is concerned about it, maybe you could let him know about the government allowance for people working at home. He just needs to claim via the .gov website using the P87 form and it’s £6 a week and can be backdated if he hasn’t claimed it already? Might be awkward to mention it but just a suggestion as the extra money could go towards the increase.

What will you do if he says “it’s okay, I’ll just put another jumper on when I’m at home so I won’t be adding to the heating bill”??

It’s totally fine to ask him and he may well think it’s a good deal, though it might be difficult to justify if your bills would be the same regardless of his presence because you’re heating the house for yourself anyway.

OP doesn’t have to justify the increase to him and he doesn’t get to say no it by saying he’ll wear a jumper.

If he doesn’t like the terms of his lodging, he can move.

Sure. But the OP doesn’t come across as somebody who’s particularly confident about this sort of thing, or she wouldn’t be asking if it’s “okay” to do on a forum. So if he says he’ll just put a jumper on instead I suspect she’ll be a bit awkward and won’t know what to say, rather than “no, I’m putting your rent up regardless to reflect my overall living costs, so you need to let me know if you want to say.”

Where are people getting the "only one rent increase allowed in 12 months" from? Pretty sure that isn't applicable on a lodger on a rolling contract.

@Biker47

Where are people getting the "only one rent increase allowed in 12 months" from? Pretty sure that isn't applicable on a lodger on a rolling contract.

It's not. Lodgers don't get a huge amount of rights really.

Thank you , all, for your very helpful responses.

@errnerrcallnernnernnern @ComtesseDeSpair This is correct. I don't have to justify an increase. I'm aware that a lodger arrangement is very different to a tenancy arrangement from a legal perspective. The reason I asked the question was more from an etiquette/moral perspective, i.e., how do I approach this increase in a way that is fair and doesn't mess up my relationship with my lodger.

@Djwt @Biker47 They don't! As an example, a landlord doesn't need to protect their lodger's deposit in the deposit protection scheme. Personally, I'd be averse to being a lodger because of the lack of rights and the risk of having a really difficult landlord who I'm having to live with all the time! I think I'm quite a nice and respectful 'landlord', hence why I have asked this question in the first place. If I wasn't, I'd just go ahead and raise the rent and tell him to like it or lump it.

I have a lodger who only moved in a few days ago. I charge £800 pcm all in but I’m seriously thinking that I need to charge more once the utilities go up in October. I am just about get the lodger to sign the agreement and I’ve put a clause in about charging more when the utilities rise. She works from home 3 days a week and this means come the winter she will expect the heating on all day😳😳 which will push my bills up astronomically. Do you think it’s fair and reasonable to charge another £100 pcm to cover this as I don’t want to be out of pocket and be landed with an astronomical bill. I live alone and my gas/elec bills are usually around the £120 mark each month (I use the timer on the boiler for the radiators) your advice much appreciated

I think the problem is if you increase so early on by 10% they may wonder if you will start sticking on 10% every six months.

also surely the actual £400 that you wouldn’t get if it was empty is a big help in the first place. Then again I live where £650 gets you a whole 3 bed house so £400 for a room and bills already sounds high really unless his taking the absolute piss with heating or something.

Get a smart thermostat for only their room radiator. Or agree for the gas to split on a 50/50 basis.

The 800 covers your elec bill and much more
Bills would need to be total 800 per month to lose out completely
You are makng a profit and extra income
What is the lodger actually costing you other than space ?
Most times people increase for the next lodger when one moves out
Not one in situ