If you’re thinking about renting out part of your property, one of the first questions you’ll face is: will your renter be a lodger or a tenant? While the two terms sound similar, they’re legally distinct – and understanding the difference matters. It affects everything from your rights as a landlord to how much council tax you’ll pay.
In this guide, we’ll break down what each arrangement means and help you figure out which one suits your situation best.
Related: Landlord guide: How to conduct a right-to-rent check?
What is a lodger?
A lodger is someone who rents a room in your home while you’re living there too. In this arrangement, you both share the communal spaces like the kitchen and bathroom.
The key difference from a tenant is the legal setup: instead of a formal tenancy agreement, lodgers have what’s called a “licence to occupy.” This means they don’t have exclusive rights to their room the way a tenant would. Technically, you can enter their room if needed, though most landlords still respect their lodger’s privacy in practice.
Why choose a lodger? Taking in a lodger is a straightforward way to earn extra income while maintaining flexibility over your home. The arrangement tends to be simpler than a full tenancy, giving you more control.
Many landlords include bills and council tax in the rent, which makes the arrangement easier to manage for everyone. There’s also a financial incentive: under the government’s Rent a Room Scheme, you can earn up to £7,500 a year tax-free from renting out a furnished room.
Related: Long- term vs. holiday lets, which is better?
What is a tenant?
A tenant has significant rights and legal protections. The defining feature is exclusive possession – tenants have full control over their space, and you cannot enter without their permission.
Most tenants sign an Assured Shorthold Tenancy (AST), whether it’s a fixed-term or rolling agreement. This creates clear structure and security for both parties, with important protections built in:
- Deposits must be protected in a government-backed scheme
- Evictions can only happen through the proper legal process
- You must give notice before visiting the property
What this means in practice? Tenants are typically responsible for their own council tax and utility bills unless the tenancy agreement states otherwise. This means less administrative burden for you as the landlord.
For many landlords, having tenants provides long-term stability and predictable income. The arrangement is more formal, but it also offers greater certainty on both sides.
Lodger vs tenant: the key difference
The fundamental difference between a lodger and a tenant comes down to exclusive possession.
A lodger shares their home with you, the landlord, and has no legal right to exclude you from their room. A tenant, on the other hand, has full control of their space – even though they don’t own it, you cannot enter without permission.
This core distinction shapes everything else about the arrangement:
Legal agreements: Lodgers have a licence to occupy, while tenants sign a formal tenancy agreement (usually an AST).
Deposit protection: Only tenants’ deposits must be protected in a government-backed scheme by law.
Ending the arrangement: You can ask a lodger to leave with reasonable notice. Tenants require a formal eviction process through the courts.
Council tax responsibility: This is usually covered by you for lodgers but paid separately by tenants.
What this means for you: As a landlord, a lodger arrangement offers more flexibility and control over your home. A tenancy provides longer-term stability and predictable income. The right choice depends on what matters most to you.
Related: A landlord’s guide to amending and renewing a tenancy agreement
Can a tenant become a lodger?
It is possible for a tenant’s status to change. If a landlord moves back into a property where a tenant already lives, that tenant may effectively become a lodger, because they no longer have exclusive possession.
In this situation, the agreement should be updated to reflect the new arrangement. Both sides should be clear on things like access, privacy, and notice periods. Because the rules are complex, taking legal advice is a sensible step if this scenario arises.
Related: How to encourage a long-term tenancy?
Finances and benefits
Money matters are often the deciding factor when landlords choose between lodgers and tenants. A few key points to consider:
- Lodger council tax: The landlord is responsible, though if there’s only one lodger in the home, a 25% single-person discount may still apply.
- Housing benefit rules: Tenants may qualify for housing benefit or Universal Credit while lodgers usually don’t have the same entitlement.
- Landlord tax rules: Income from tenants is treated as standard rental income, but income from lodgers may fall under the Rent a Room Scheme for tax-free earnings.
- Bills: Many landlords include utilities in a lodger’s rent, while tenants usually cover them separately.
It’s worth weighing up not just the potential income, but also how much flexibility or long-term stability you’d prefer.
Related: What is a periodic tenancy?
Which option works best?
The right choice really depends on your goals.
- If you want a simple, flexible arrangement and don’t mind sharing your home, a lodger could be ideal.
- If you’d prefer more structured income and stronger legal protections, a tenancy will give you that framework.
In either case, putting everything in writing – whether it’s a lodger agreement or a shorthold tenancy is the best way to avoid misunderstandings.
Related: A landlord’s guide to student lets
Making the right choice for your property
Understanding the difference between a lodger and a tenant goes beyond terminology. It shapes your legal responsibilities, affects your finances, and determines how much control you maintain over your property. Getting this decision right from the start can save you time, money, and potential complications down the line.
At Ellis & Co, we work with landlords to ensure their rental arrangements are set up properly and run smoothly. For tailored advice on your property, get in touch with your local Ellis & Co branch today.
