Will renting a room affect my mortgage?
- Ben Stephenson
- 3 days ago
- 9 min read
Updated: 3 November 2025
Yes, renting a room can affect your mortgage, insurance and day-to-day costs, but in ways that are usually manageable.
Many mainstream and specialist lenders allow resident landlords to have a lodger, and they often only ask that you tell them first and keep living in the property yourself. Where it differs is how, or whether, lodger income counts toward affordability. Some lenders ignore it, some may include a percentage if it is well evidenced, and a smaller group may take a more flexible view via specialist channels.
Your home insurer will usually want to know you are taking in a lodger, and your premium may change. If you currently receive the 25 percent single person council tax discount, you normally lose it when a lodger moves in, unless the lodger is disregarded, for example a full-time student.
The Rent a Room Scheme may let you earn up to £7,500 a year tax-free if the room is furnished in your main home. Rules differ by lender and local authority, and there are extra requirements if you host more than two lodgers.
Written by Ben Stephenson, CeMAP-qualified Mortgage Broker, and reviewed by Mortgage Experts. Manor Mortgages Direct is FCA authorised (496907), has been in business for nearly 30 years and is highly positively reviewed, 4.9 rated on Google. We have helped thousands successfully secure the right mortgage. We are Bristol based mortgage brokers, and we assist nationwide.
Table of contents
What changes for my current mortgage if I take a lodger?
Do I need my lender’s permission or “consent to let”?
Can I use lodger income to boost affordability when buying?
Remortgaging to raise funds, then using a lodger to boost income
How much could I actually earn, and what is the tax position?
Lender Acceptance Spectrum, and where specialist lenders fit
Policy exceptions brokers sometimes secure
Why this matters in 2025
What surveyors and underwriters actually look for
Hidden costs and common mistakes to avoid
Case study: creating affordability with a planned lodger
FAQs
Glossary
Next steps, and how brokers help
1) What changes for my current mortgage if I take a lodger?
For most residential mortgages, having one lodger is allowed, provided you continue to live in the property. Lenders typically expect you to notify them and comply with your mortgage conditions, but separate “consent to let” is not normally required because you are not letting the whole property. You must also understand your lodger’s legal status as an excluded occupier or an occupier with basic protection, which affects notice and deposit rules.
Insurance: you should tell your buildings and contents insurer before a lodger moves in. Failing to do so can risk cover being declined. Expect possible premium changes or conditions.
Council tax: if you live alone and add a lodger, you usually lose the 25 percent single person discount. Exceptions apply for disregarded persons such as full-time students.
Right to Rent checks: in England, you must complete the Right to Rent check for adults living in your home. Penalties for non-compliance increased in February 2024 to up to £10,000 per occupier for a first breach, and up to £20,000 for repeat breaches.
Deposit protection: for lodgers, deposits do not have to be protected in a tenancy deposit scheme, unlike tenants on assured shorthold tenancies. Good practice is to issue a receipt and set clear deductions in the lodger licence.
2) Do I need my lender’s permission or “consent to let”?
If you still live in the property, you are a resident landlord, so you are taking in a lodger rather than letting the home on a tenancy. That usually means no formal consent to let is needed, however most mortgage conditions say you should check the terms and inform the lender first. If your home is leasehold, also check the lease for restrictions that may require freeholder consent.
Where you plan to move out and rent the whole property, that is not lodging. You would be seeking consent to let or a buy to let product instead, a different scenario outside this guide’s scope.
3) Can I use lodger income to boost affordability when buying?
Sometimes. Lenders must assess affordability under FCA MCOB 11.6, and they differ on how they treat non-guaranteed or secondary income such as prospective lodger receipts. Many lenders do not count projected lodger income for purchases. Some will include a portion if you can evidence sustainability after completion, and a minority may be more flexible via specialist channels. Expect conditions like using only a percentage of the rent and showing credible demand for the room.
You do not need a signed lodger agreement before completion. In practice you cannot house a lodger until you own and occupy the home. Lenders that do consider lodger income typically accept post-completion evidence, for example market comparables, an outline licence template, or letting-site data as context, then they verify actual receipts later.
Practical proof that helps after completion:
Three to six months of bank statements showing regular lodger payments
A simple lodger licence agreement and room inventory
Evidence of market rent in your postcode from reputable sources
Confirmation that Right to Rent checks and insurer notification have been completed
4) Remortgaging to raise funds, then using a lodger to boost income
Two common homeowner goals in 2025 are to:
Release equity to improve or reconfigure the home, for example adding an en-suite to create a more lettable room, and
Use lodger income alongside your salary to support affordability.
Lenders must test affordability responsibly under MCOB 11.6, including interest rate stress assumptions. Some will consider secondary income streams if they are verifiable and sustainable. If lodger income is used, lenders commonly cap the portion included and apply their own stress rates. The FCA also reminds firms to avoid unduly restrictive stress testing and to support customers through options where appropriate.
What to prepare for a remortgage:
Clear plan and budget for any works
Evidence of market demand for a furnished room in your area, for example SpareRoom index references and live ads data
Insurance confirmation and, if relevant, HMO awareness if you ever expect to host more than two paying lodgers
5) How much could I actually earn, and what is the tax position?
The Rent a Room Scheme allows up to £7,500 per year tax-free from furnished accommodation in your main home. If you share the income with someone else, the threshold is £3,750 each. You can opt in to use the allowance or opt out and declare actual profit.
Average advertised UK room rents were £753 per month in Q3 2025, the highest on record, though rent growth slowed year on year. This is a helpful sense-check for your local market.
Private rents overall rose sharply through 2024 according to the ONS, which helps explain demand for rooms and why lenders remain cautious about affordability.
Important: if you take more than two paying lodgers, your home may be treated as an HMO under local rules, adding compliance obligations. Resident-landlord set-ups with three non-family lodgers can be HMOs in many councils, and separate mandatory licensing applies from five or more occupiers in two or more households.
6) The Lender Acceptance Spectrum for lodger income
From our brokerage experience, lenders cluster roughly into five stances. This helps set realistic expectations.
A. Lodger permitted, no income credit, borrower must qualify on core income alone.
B. Lodger permitted, limited income credit, for example a portion of rent included once proven by statements after completion.
C. Lodger permitted, case-by-case inclusion, more flexible treatment where risk is mitigated by low loan-to-value, long employment, or surplus affordability.
D. Specialist acceptance, dedicated policies that may consider a higher share of lodger income with robust evidence and prudent stress tests, typically available via intermediary-only lenders.
E. Not permitted, usually due to product-specific restrictions or property type.
This spectrum is descriptive only, not an offer or guarantee. Policies change, and each case is assessed under FCA affordability rules.
7) Policy exceptions brokers sometimes secure
Lenders sometimes waive a hard rule where compensating factors exist, for example:
Low overall LTV with strong disposable income after bills
Evidenced lodger payments for 6 to 24 months and a clean conduct history
Professional lodger profile, for example hospital staff on regular shifts, and clear Right to Rent documentation
Property layout that mitigates household risk, for example dedicated bathroom and lockable door
These outcomes are never guaranteed, but they do happen more often when a broker packages the file with the right evidence and narrative aligned to MCOB.
8) Why this matters in 2025
Rents have climbed since 2023, and room rents are at record levels in 2025, so the Rent a Room route is an effective buffer for many homeowners. Regulators have also updated guidance to ensure lenders support borrowers and avoid excessive stress testing that could block otherwise affordable cases. This is why a brokered approach to lodger income can add real value.
9) What surveyors and underwriters actually look for
Underwriters usually focus on:
Sustainability of income, not just the headline rent. Expect requests for bank statements, a simple licence and proof you are a resident landlord.
Affordability under MCOB 11.6 stress rates, with non-guaranteed income often hair-cut.
Compliance evidence: Right to Rent checks, insurer notification, and awareness of HMO thresholds if you will ever have more than two lodgers.
Surveyors value the property as an owner-occupied home. They may note material alterations and the general suitability for shared use, but they do not capitalise lodger income in a standard residential valuation. If the layout trends toward an HMO, expect questions.
10) Hidden costs and common mistakes to avoid
Costs people forget:
Insurance adjustments or conditions once a lodger moves in
Loss of the 25 percent single person council tax discount unless the lodger is disregarded, for example a full-time student
Minor upgrades, for example door locks, smoke alarms, extra keys and wear-and-tear items
Annual safety checks and a modest contingency for voids
Mistakes that risk the mortgage:
Not telling your lender or insurer about a lodger
Using a tenancy agreement instead of a lodger licence
Skipping Right to Rent checks, which can now mean fines up to £20,000 for repeat breaches
Hosting three or more paying lodgers without understanding HMO rules
Missing one clause in a lodger licence or lease can derail a mortgage switch at offer stage. A broker’s document check is a low-effort way to protect an application.
11) Case study: creating affordability with a planned lodger
Situation: A Bristol buyer with a strong salary but tight affordability wanted a two-bed flat. They planned to rent the second bedroom to a professional lodger after completion to create headroom for rising costs.
Approach: We placed the case with a lender willing to consider a portion of projected lodger income subject to post-completion evidence and a conservative stress test. We packaged: a draft licence, market rent comparables from SpareRoom, and a budget for minor works. The lender assessed the mortgage on core income, then allowed a small income credit at underwriter discretion, which made the difference between a decline and approval under their rules. After completion, three months of bank statements and a signed licence were supplied for the lender’s file, exactly as requested.
Result: Purchase completed. The buyer opted into Rent a Room, kept receipts, notified the insurer, and avoided council tax pitfalls. This is illustrative only, not an indication of your own outcome.
12) FAQs
Will renting a room increase my mortgage rate?
Usually no. You typically remain on a residential product if you still occupy the property, but always check your conditions and tell your lender.
How many lodgers can I have before it becomes an HMO?
More than two paying, unrelated lodgers usually triggers HMO status with extra standards. Mandatory HMO licensing applies from five or more occupiers in two or more households. Check your council’s rules.
Do I need to protect a lodger’s deposit?
No, deposit protection schemes do not apply to lodgers, but you should give a receipt and clear terms on deductions.
Will I lose my single person council tax discount?
If you live alone and take a lodger, you generally lose the 25 percent discount, except where the lodger is disregarded, for example a full-time student.
Can I count a lodger’s rent when I apply for a mortgage?
Some lenders may include a portion once it is evidenced, others ignore it. Rules vary, and lenders must meet FCA MCOB affordability standards.
Do I need a tenancy agreement?
No, a simple lodger licence is usual for a resident landlord. GOV.UK explains how tenancy type depends on sharing living space.
Do I have to do Right to Rent checks on a lodger?
Yes, in England you must. Fines increased in February 2024 for non-compliance.
13) Glossary
Lodger: someone renting a room in your home while you also live there.
Resident landlord: you live in the property and let part of it.
Rent a Room Scheme: HMRC relief on up to £7,500 of gross annual receipts from furnished accommodation in your main home.
HMO: House in Multiple Occupation, often triggered by three or more unrelated lodgers in a home, with mandatory licensing from five or more occupiers.
Right to Rent: legal requirement to check adult occupiers’ immigration status in England, with increased civil penalties from Feb 2024.
MCOB 11.6: FCA rules on responsible lending and affordability.
14) Reader’s checklist: questions to ask a broker or lender
Will you permit one or two lodgers on my mortgage if I keep living in the home?
If yes, do you include any lodger income in affordability, and what percentage is typical?
What documents do you need after completion to evidence the income?
Do you require me to tell you if I add a second lodger or if I change the property layout?
Any product-specific limits that could create HMO risk at three lodgers?
What is your current stress test approach for secondary income?
Are there leasehold restrictions or freeholder approvals to obtain?
Have I notified my insurer and completed Right to Rent checks correctly?
Final thought
If you get the documents, policy and timing right, renting a room can work with your mortgage rather than against it. Where lenders differ most is how they treat the income. A targeted broker approach reduces the risk of surprises and helps you benefit from the Rent a Room allowance while staying compliant.