Borrowers and lodgers

There are vital considerations to make for those contemplating lodgers. Firstly, homeowners need to maintain financial stability independently of the lodger's contributions. While the extra income can be beneficial, it should not be relied upon to cover essential expenses like your mortgage - use the money towards luxuries, for example. Additionally, be aware of the legal and financial obligations, this brings including permissions from superior landlords (if leasehold) or mortgage lenders you may require, potential impacts on your Housing Benefit and Universal Credit. Make sure you are compliant with the Right to Rent check as you could face a large fine if you inadvertently housed an illegal immigrant. Ensuring the safety and condition of your home, adhering to housing regulations, and creating written agreements and inventories are essential steps you must also follow. Don't forget to inform your home insurer about the change in occupancy to prevent issues with home insurance.

I am hearing more clients considering getting a lodger when we discuss their mortgage payment increasing dramatically. I have a fee clients that are going to explore the option as they are concerned that they will soon start struggling with their bills once the new mortgage payment starts.

I currently have a brother and sister who are looking at buying a home together as they are nervous about living costs and are looking to combine their income, It should work well for them but they are already thinking of possible issues in the future if one of them wants to sell up. We have already run through potential situation changes so they can weigh up all eventualities before committing themselves.

I've only ever had a couple of times where a client has or intends to have a lodger living at the property. There are two very important considerations if this is something you are looking to do; is it in your mortgage T&C's that this is acceptable to the lender, or do you need to speak to them and ask for permission first? Next; check your buildings and contents insurance, you may need to amend the policy you have or purchase a new policy that allows lodgers at the property.

Buying property with a friend whilst often sounding like a good idea, can often turn into a nightmare if the friendship fails. Too often people rush into joint purchases with too little thought to making sure they are secure legally. Common issues we see include:
Friends falling out and arguing over who owns what share because this was not set out at the start.
One owner requires the property to be sold but the other(s) not wanting it to be sold.
One owner no longer being able to afford to pay the mortgage/bills.

There is also the issue of what happens if one party dies. What happens to their share, not only of the property but also the mortgage?

Likewise renting out a room can seem like a great idea but it too carries risks. Before entering into such an arrangement it is wise to check your house insurance allows it and that you have an appropriate agreement drawn up, ideally by a solicitor or expert in this field.

As the cost of buying a property gets higher and higher, buyers are getting creative in the methods they are using to get on the property ladder. Mortgages with additional people named on them to utilise extra income are very common now. Gifts from parents or family occur on most applications, particularly first-time buyers. Joint borrow sole proprietor mortgages are a welcome development that uses the extra income but avoids the additional name going on the deeds which can help with the stamp duty bill. This pattern will only become more pronounced in future as the situation continues to amplify.