Dispute Resolution and Prevention
Even with the most ideally suited landlord and lodger, there will occasionally be misunderstandings and disagreements. If you, as the landlord, have done your homework properly, and carefully selected and vetted your lodger, and you are both on board with the Agreement and house rules, 95% of the time these will be very minor and easily resolved.
Please note that the advice that follows assumes that there isn't a very serious problem between your lodger and yourself, such as consistent rent arrears, abuse, vandalism, drug use etc or even persistent deliberate breaking of the lodger Agreement. This is about resolving smaller day to day issues, to ensure these don't blow up into something more serious. If you are having serious issues with your lodger, the only answer is to serve notice.
If you find yourself feeling crowded, you might want to agree some time with your lodger when you each have your own space. For example, it might be agreed that you get the lounge to yourself for an hour after work each evening, so you can relax and unwind - however (unless in the unlikely event that your lodger is flagrantly breaking the Agreement or doing something else completely out of order) you should never demand or impose something, always negotiate.
If one party grants the other a favour or concession, this should be repaid in kind. Therefore, if the lodger agrees to be "vanished" from the lounge for an hour each evening, you return the favour - maybe they can then have exclusive use of the lounge (or garden say) for a few hours during the day on Saturday or Sunday.
Whatever your relationship is with your lodger, once a week you could do something together such as sharing a meal, a bottle of wine, watch a film or listen to music (from which non residents are normally banned!). Use this time to informally raise and discuss any issues. This will also help break the ice if you and your lodger are living very separately.
While you and your lodger can never be truly equal in a live in let situation, the lodger should never have to defer to you (provided they are within the Agreement) on a day to day basis. So, for example, it's only common courtesy that they let you know their partner wants to stay the night tomorrow (although it's probably better to have set nights when partners stay), or their friend wants to visit Saturday afternoon, but not to have to ask your permission. Likewise, they live there - they should never have to walk out of their room to find your (expected) visitor standing in the hallway!
The bottom line should always be that while your lodger is complying with the house rules and Agreement, and paying the rent as expected, for day to day matters, you are equal house mates - don't pull rank as landlord unless there's a serious transgression on the lodger's part! In addition, if you want a good relationship with your lodger, the Agreement cuts both ways - you are also subject to it - if the lodger cleans the common areas one week, you do it the next. Your lodger's boyfriend is not to stay more than two nights each week - it's therefore not ok for your partner to spend every other day there! 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!
Also, be tactful about phrasing things. For example, after I had been letting a room from someone for about eight months, I got a text from her saying that if I was at her place the following afternoon, I was not to answer the door. Now, if I had only been her lodger for eight days, not eight months, this might have been understandable - though I would still have been entitled to an explanation as to who the awkward caller might be and why I shouldn't answer the door!
Here's a great lesson (and a great film!) by Andrew Flynn and Chris Nials about how you don't behave toward your lodger or flatmate!
@The_Landlord has kindly featured many of my answers to landlord's and lodger's questions on his Taking In Lodgers- ‘Rent-A-Room’ Scheme Guide on his comprehensive (and very entertaining!) popular landlord advice site and blog, Property Investment Project. Topics covered include how rent from a lodger affects benefits, lodger running a business, rent, tax and serving notice.