Renting out a room can have financial benefits to a homeowner renting out a room in his house, a basement room or garage apartment.
It can generate more income for a landlord who's renting an investment property by the room to a number of tenants, rather than letting out the whole property to one tenant.
There are advantages of renting a room for tenants who can collectively afford better quality accommodation and the lifestyle that goes with it.
Having your lease for renting out a room and other related forms in place is important for all parties and we will assist you with this.
The Premises - How to describe the actual premises that you will be letting, the period of the rental and the rental and security deposit payable.
Additional Payments - How to provide for utilities, subscriptions, shared supplies,cleaning services.
Personal Property - Provision for insurance or when damage is caused by a tenant or third party.
House Rules - How to ensure harmonious living when it comes to rules about smoking, pets, guests, quiet times etc.
Breaking the Rules - Conflict can be resolved by mediation, enforcement by other roommates or ultimately by eviction.
How to Calculate Room Rental - Use a simple formula or bidding process and add in any extras.
Can Couples Rent a Room - How to structure the lease, calculate their rental and what happens when they split up.
Family Member Lease Agreement - Rights and obligations of family members.
Renting a Room and Taxes - How to calculate rental income and permissible expenses.
Room Rental Agreements - We have a variety of free templates that cater for various room rental situations as well as the additional forms you may need such as an application form, deposit receipt, receipt for renting a room, etc.
Note: You need to ensure that the premises comply with the minimum living requirements in your jurisdiction e.g free from damp, fitted with working smoke alarms, fire safety and equipment, lead paint disclosure etc.
The Lease Period
Rental and Security Payments for a Room Rental
Damages and Insurance
Breach of the Terms and Conditions
Different rules are applicable to different situations as per the examples below.
If you are the homeowner and you will be renting out a room in your own home, then you have the right to be more selective when choosing a tenant with regards to gender, religion, race etc. without being accused of being discriminatory.
Homeowners are best advised to get permission before entering a tenant's room in their own home. If you are a non-resident landlord then you need to give the required notice as per the formal requirements in your location - normally not less than 24 hours.
If you are the landlord, then you can make the rules as long as it does not contravene the laws in your state / province or country.
For example, you cannot totally forbid visitors (as long as they are not a nuisance or cause damage to the property) or even overnight guests of tenants, but you can specify the maximum number of days per week / month that it is allowed.
If you are the primary / principal tenant and are subletting or subleasing, then you will require your subtenants to abide by the conditions in the original lease as well as any other rules that you may specify at the start and in due course as new situations arise.
Sidebar: If you are subletting out a room, most of the above will already be determined according to the original lease which was entered into with the landlord. A primary tenant may also want to add clauses that are pertinent to the specific property. However, you also need to stay within the permissible legal boundaries of the subletting laws of your jurisdiction.
If you are the landlord you have the right to evict a tenant, but if you are a co-tenant then you cannot evict another co-tenant.
Yes - If you are the master tenant / primary tenant, having signed the lease agreement with the landlord and you are subletting or subleasing to a roommate, you can evict a roommate.
No - If your roommate is the primary tenant.
1. Calculate the common use area as a portion of the house and divide it equally amongst the number of occupants. Eg: Common area is 20, total area is 100 so 20% of the rental is for the common use area.
2. Calculate each bedroom space as a portion of the rental for the REMAINING Area and apportion to the respective tenants.
3. Divide the utilities amongst the number of occupants - if there is equal use on the face of it. If one roommate makes excessive use of heating or cooling, then the situation can be reassessed.
4.Parking space - If that is included in the rental amount then use a market related figure and deduct that off the rental before calculating #1 above.
Another simple solution for apportioning the rental amounts is to go through a bidding process. Highest bidder gets the best room, then the remaining occupants bid for the next room and so forth. Any surplus over the rental amounts then gets calculated back to each tenant. Here's another way to calculate rent division as published in The New York Times.
Furnishings and other inventory supplied and amenities (such as AC) may add to the rental that can be charged for a room.
It is a fact of life that some occupants may make more use of the common areas than others e.g. use a hallway or dining area for a work-from-home station, store sports equipment or musical equipment in a garage etc.
One should not be overly pedantic about the use of every square foot, but should rather screen prospective housemates from an affordability viewpoint and as much as possible for compatibility regarding character and demeanour.
An empty room for a short period is much cheaper than having to evict or get rid of a problem roommate!
When couples rent a room they will most often sign as co-tenants to the lease agreement.
It may be an attractive proposition for the homeowner or landlord because two income streams allows for affordability of the rental.
However, the time may come when the partnership breaks up and you need to specify:
Do this before you start the joint lease, when both parties are more amenable to come to an agreement.
We've had experience with couples splitting up during the tenancy, sometimes creating a difficult situation with the lease agreement because the remaining partner cannot afford the rental as an individual.
Another way to do it would be to enter into a room rental agreement with one person as primary tenant who can afford to rent the room and give the primary tenant permission to sublet to the partner. Our free sublease agreement template can be used in this instance.
However, the landlord may prefer that the new joining partner signs as a co-tenant (rather than being a subtenant) and this can easily be done by executing an addendum to the original lease agreement.
Links to all these free forms are available at the end of this page.
The reason for the landlord preferring a joint lease agreement when renting out a room, is that all the occupants are bound by the lease and are held jointly and severally responsible for the rent and the terms of the lease. Therefore if one tenant does not pay or causes damage to the property, the remaining tenants have to make up the shortfall in rent or pay for the repairs.
In this case the cohabiting partners will then be co-tenants and neither will have the legal right to evict the other - only the landlord can do so.
Room rental amounts are generally calculated on the size of the room itself, the size of the communal area, the amenities (e.g. en-suite bathroom, private balcony) and the desirability of the room (e.g. it has a sea view, private entrance or enclosed garden etc.).
The utilities are split equally amongst the number of occupants, or as otherwise agreed.
That is all fine and well when doing a calculation for a single occupant.
However, if a partner subsequently moves in, there is an increase in utilities which must be re-calculated per person. There is also an increase in the usage of the common areas which will impact on the other occupants.
As landlords we prefer to specify a maximum number of occupants in the dwelling, regardless of how many bedrooms there are. This is because of the increased maintenance that comes with an increased number of occupants.
If there are a number of other tenants then the first step for the landlord would be to have an open discussion with them as to the viability should a partner want to move in and to involve them in the screening process. A self-contained garden apartment will be easier to rent to a couple because it does not affect other occupants of the home as directly.
It is best to have a written agreement in place for any tenant - whether a stranger, a friend, a person related by marriage or a blood relative (and their pets)!
It should clearly define the expectations of the landlord as well as the rights and obligations of the family member.
Because we may treat family members more leniently than a normal tenant, the situation could arise where the family member takes advantage of this kindness and thereby creates an untenable situation for the landlord and probably more so for the landlord's spouse.
Sometimes a family member may need accommodation for a limited time only but very often they overstay their welcome. If the intention is for the family member to stay for a limited time only with the option to move out earlier if he wants, then clearly specify that in the lease:
Term of the Lease:
Occupancy of the premises shall be from _______________ until _______________
The Family Member agrees to vacate the Premises by midday on the end date.
However, if the lease is for a fixed period and you rely on the agreement to be for that time, then the same rules apply as if you were leasing to a stranger. If he wants to move out earlier, then he is bound as per the terms of the lease i.e liable for the rental until a new tenant is found and reasonable costs related to the placement of a successful candidate e.g. advertising, agency procurement fees etc.
With a signed family member lease agreement in place, the landlord has the legal right to issue a notice to quit and if the family member still does not move out, the landlord can file to evict as provided for in his jurisdiction for breach of the lease termination clause.
If the family member defaults on payments or violates any of the terms of the lease, then normal eviction procedure can be followed.
Other just causes for eviction are causing damage to the property, illegal activities, being a threat to the health and safety of others, having a pet in breach of the lease terms and conditions, etc.
If you need a family member lease agreement for a portion of shared accommodation, then one of our free Room Rental Agreements as listed below can be used.
The rental income must be declared for tax purposes and there may be limitation on claiming expenses if the family member is a spouse or a child.
Lease for Renting a Room - One-on-one agreement between the homeowner/landlord and one tenant.
Room Rental Lease Agreement - When you are renting out more than one room in a property and have one joint lease agreement with multiple tenants.
Sublease Agreement Templates - A primary tenant sublets a property or portion of a property - as with a room subrental or a roommate sublease - to a subtenant or sublessee.
Roommate Rules Agreement - You do not need to cover every contingency in your room rental agreement when renting out a room. You can have a separate House Rules agreement which can be signed and attached to the rental agreement.
Roommate Chore Chart - A simple way to schedule cleaning on a rotating basis.
Security Deposit Receipt - Provision is made for all the deposit payments as well as notification to tenant to provide a forwarding address at the end of the tenancy.
Receipt for Renting a Room - Keeping records of ongoing payments for both landlord and tenant.
Room Rental Addendum - A simple form to substitute one tenant for another without having to execute a new room rental agreement.
Free Room Rental Application Form - To be completed by prospective occupants because it also gives written permission to do a criminal background and credit check. It is standard for the applicant to pay a fee to perform the check.
Renting a room advice - A lease for renting out a room can be as extensive or basic as you wish it to be. However, the best result for successfully renting out a room starts with the application form and tenant screening. Find the most suitable candidate for your property, even if you have to lower the rent a bit in order to secure a quality tenant.
This is the best advice that any experienced landlord will give you!
Incidentally, when renting a room in a condo or apartment there may also be a Code of Conduct issued by the Homeowners Association or Body Corporate which tenants need to have a copy of and abide by.
United States - Renting residential property
United Kingdom - How to rent a room in your home
Ireland - Renting a home or a room
Canada - Rental income from properties
South Africa - Rental income and expenses
Australia - Renting all or part of your home
New Zealand - Renting and flatting
As landlords we've been renting out a room to a number of tenants over many years and it has not been an arduous exercise at all. Proper tenant screening is always key!