Letting Beneath the Radar
NB this page contains some general legal information which is for guidance only and is not legal advice see - Disclaimer
So why should it be anyone else's business except my lodger and mine?!
Even if the let is done on a nod and a wink, it is still a legal contract, and certain rights and obligations, such as notice terms, will be implied. If you are accepting a rent for a room in your home (over and above a reasonable amount for additional expenses for utilities and council tax) from someone, you are letting to that person, not just doing them a favour by letting them stay for a while. You are still bound by the contract, even if you don't have permission to let from an interested third party, such as your mortgage provider or landlord (if you rent your home).
In fact, as a live out landlord myself, I'll let you into a trade secret; when we come across tenants who illegally sublet or take in lodgers, we normally employ a special procedure - called eviction - not only of the illegal occupiers (whether they be lodgers or subtenants, but the main tenant too! This is even more likely to happen following the introduction of Right to Rent from 1 February 2016, which makes landlords, including resident landlords liable for occupants who don't have the right to live in the country.
However, if your lodger/guest has the use of separate bathroom and cooking facilities (e.g. a "granny flat"), you need to be especially careful as any money over £250 a year could legally count as rent, and you will therefore have created a tenancy and will need a court order if they refuse to move out!
Get your own direct referral barrister, dealing with many legal matters, including landlord and tenant, for £25 a month with Litigation Warranty - no solicitor needed.
In other words regarding the let as unofficial and beneath the radar does not absolve you of your legal and financial responsibilities (to both your lodger and other parties).
For example, failing to get a gas safety certificate, which you must do each year you let any type of property within the UK, even just one room, leaves you liable to prosecution.
If the agreement runs from week to week, by law in England and Wales you must give your lodger a rent book, regardless of how the rent is actually paid. It is advisable to give them a paper copy. A legally compliant rent book, for all types of weekly let, including room lets to lodgers, can be downloaded for free from here.
If you choose not to inform outside interested parties, such as Council Tax or the Inland Revenue, don't assume that your let is a big secret and that no one else is in a position to report it. Government and local government departments follow up all reports they get on matters such as benefit fraud - which includes abuse of the council tax single occupier's discount. When I worked for a time at a local job centre, my Fraud Investigator (FIs) co-workers always followed up reports from the public, even if they believed they were likely to be false.
You are also very likely to be in trouble with your mortgage provider, or your own landlord if you're a tenant, as well as invalidating your insurance. How will you feel when your lodger (whether maliciously or by accident - and we all have them!) causes significant damage to your home or property - but your insurance won't pay as the lodger shouldn't have been there in the first place!