Agree on House Rules Beforehand
Why the Landlord is above the law!
In the UK, and as far as I'm aware, lots of other countries too, the law takes the view that it's the landlord's home and the lodger is therefore very much the subordinate, being obliged to obey more or less any rule the landlord decrees and can be asked to move out at very short notice. The often informal nature of such arrangements only serves to make this worse - while the landlord may be able to force the lodger to move on a whim, it is equally hard to prove any wrong doing on the lodger's part, such as damage or withholding rent - both parties are therefore taking a big risk when the arrangement is this loose and informal.
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It is therefore necessary that clear house rules are drawn up before the lodger moves in BUT, for the sake of a good landlord/lodger relationship, a good resident landlord should set a fairer standard than the minimum that most countries' laws currently set, so they are, on a day to day basis equal house mates provided the rent is paid, the (reasonable!) Agreement and house rules adhered to, and the lodger treats the landlord and his or her home with respect.
Points to consider when setting up house rules
In a nutshell, the most common areas of dispute are, aside from not paying rent on time, overnight guests, cleaning, lodger's use of utilities (such as heating, water etc) and of course, noise.
While house rules are essential up to a point for peaceful co-existence, avoid being too proscriptive. The rules should be agreed with your lodger, not simply imposed on them. Also, aside from the obvious things, they should be based on the two of you as individuals, and your lifestyles and living arrangement, not simply because you've heard that Mrs Rachman down the road doesn't allow lodgers to eat in their room, so you think you'll disallow this too, or you once had a lodger who brought stray cats in, so you'll have to state that too! The rules should be about conditions you genuinely need to be met in order to run your life and home smoothly - e.g. you need access to the bathroom by 07:00 each morning if you're to catch your train for work.
"Can you be perfect?" How not to set house rules! Film by Andrew Flynn and Chris Nials
Having said that, it's very important that you cover everything that's likely to be an issue in the Agreement and rules, as this will inform your day to day living arrangement. For example, if you've said in the rules that it's OK for the lodger's partner to stay 3 nights each week, or for him to do his violin practice, but after six weeks it's getting on your nerves, it's going to be very hard, if not impossible, to renege on a legally binding contract and say you will no longer allow it - at the very least, this will cause bad feeling with your lodger - even if he says nothing at the time! It's better therefore, to say from the outset that the partner can stay for 2 nights maximum, and violin practice only at certain times (preferably when you're out!!) - you can always let up later if you find it's not such a problem. After an inconsiderate or hostile landlord or atmosphere, the thing most likely to really rile a lodger is the landlord imposing new rules or changing existing ones after the lodger has moved in (although a short period of adjustment soon after the lodger has moved in while you find your feet and negotiate on very small things is ok).
For a good relationship, the Agreement cuts both ways - you the landlord are also subject to it - if the lodger cleans the common areas one week, you do it the next. Your lodger is not to have the TV at normal volume at night or do anything to disturb you - so it's not all right for you to be banging around the kitchen at 2am! Your lodger's boyfriend is not to stay more than two nights each week - it's therefore not ok for your live out boyfriend or girlfriend to spend nearly every night at your place!