If you're thinking about letting out a room (or rooms) in your house, there are a number of points you should consider.

The first, and possibly most important, are the implications of sharing your house with a stranger. Always take up references from people who know the person who is renting the room. If possible, get a reference of the person they last lived with - this may be a parent or their last landlord.

Before a Lodger Moves In

Before the lodger moves in, take some photos of the room and draw up a full inventory of its contents. The photos may be useful if the lodger causes damage and you need to claim money for repairs.

You should also decide how often rent will be due - perhaps weekly or monthly - and how this will be recorded. Ask your new lodger for a deposit, typically one month's rent, to be held until the lodger leaves.

You can check the market rent by looking in local newspapers.

Tax Implications

Since April 1992, a landlord who rents out one or more rooms in their home can take advantage of the Rent a Room scheme. This means that the first £4,250 of income received from renting is usually exempt from income tax. To be eligible, the landlord must be an owner-occupier or tenant, and must be letting furnished accommodation in their only or main home. The tax relief applies to gross income received in the tax year from the letting, regardless of how many rooms are let.

To calculate whether you will be better off joining the scheme, or simply declaring your letting income and claiming expenses on your tax return, you need to compare the following:

• the amount of your receipts (rent plus any income from laundry services, meals and so on) over £4,250
• how much income you are left with after your expenses

If you opt into the scheme you will pay tax on the first amount; if you are not in the scheme, then you will pay income tax on the second amount.

Giving Notice

As long as you have lived in the house, or a member of your family has lived in the house, as your/their only or main home since the beginning of the letting agreement, and as long as you share accommodation with the tenant, then the tenant is likely to be an 'excluded occupier'. For this definition to apply, you must be sharing the use of a room, for example living room, kitchen or bathroom.

An excluded occupier does not have any statutory protection against eviction but you should still give notice at the end of the tenancy. In nearly all cases, four weeks' notice would be considered reasonable. The notice you give does not need to be in any particular form, and could be oral. However, it's best to give notice in writing and keep a copy for yourself.

At the end of a tenancy, you should check the inventory with your lodger, and after you have made any deductions for damage or rent arrears you should return the rest of the deposit to your tenant. You do not have a legal right to deduct money for fair wear and tear -...