Will new bill make it harder to evict our lodger?

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We’ve rented our attic room to a lodger for almost five years. The tax-free income we make has covered trips away and we like having the security of someone there when we’re on holiday. But we wonder if the renters’ rights bill will affect lodgers’ licences, as well as tenancies. We can’t find any information about this online. Can you help?

Matt Hutchinson, a director at houseshare website Spareroom, says the renters’ rights bill is progressing through the House of Lords, promising to transform the rental sector and offering greater protections for tenants once “no fault” evictions are abolished and open-ended tenancies are introduced, alongside new rules around rent increases. “No fault” evictions allow landlords to evict a tenant without giving a reason.

Most landlords are worried about the changes, with many saying it will reduce their profitability and leave them more prone to hefty fines and penalties. As a result it will be harder to evict problem tenants and many are considering moving their money elsewhere. In a recent survey of more than 900 UK landlords, two-thirds planned either to leave the sector altogether, reduce their property portfolios, or move into short-term/holiday lets, citing the bill as their main concern.

However, because the renters’ rights bill will not apply to housing arrangements not classed as assured tenancies under the Housing Act 1988, your arrangement with your lodger should not be affected. 

Lodgers sign agreements called licences, rather than tenancy agreements. To be classed as a lodger, they must live in the same home as you, share your kitchen, bathroom or living room.

Provided your attic room is not a self-contained flat, and the occupant shares communal spaces with you, then they are a lodger. Lodgers don’t currently have much protection against eviction compared with a tenant, but they must be given enough notice to move out. How much notice is enough will depend on the individual lodger’s situation.

Homeowners who rent out rooms in their homes benefit from tax-free income of up to £7,500 a year under the Rent a Room scheme. With average room rents currently £774 a month in the UK, according to research by Spareroom. we’d like to see the government raise the tax-free threshold to represent rents today, to encourage more homeowners to rent rooms to lodgers. 

Can my ex remove unvested shares from our divorce settlement?

My husband has worked for a US tech company for 20 years and has accrued a significant number of shares with them. We are in the process of splitting up and are trying to do this amicably and avoid the courts if possible. Because a large proportion of his shares won’t vest for a number of years, he says it wouldn’t be fair to share some of their value in our settlement, as he doesn’t have the cash and they may become worthless, which seems unlikely. What are my options? 

Voirrey Ward, a partner in the divorce and family team at law firm Stewarts, says the Family Court in England and Wales has a range of powers and mechanisms to help couples divide their assets upon divorce, with an emphasis on fairness and a distinction between marital and non-marital assets. The starting point is that marital assets are shared equally between spouses, although departing from this 50:50 approach may be justified in certain circumstances.  

If your husband’s stock was granted during the marriage, it is likely considered a marital asset, regardless of whether a proportion is unvested or difficult to value. The court is unlikely to support his proposal to ignore it, as this could be unfair. Instead, the starting point is that the stock (vested and unvested) should be divided equally. However, if the husband can demonstrate that the future vesting of the stock depends on his post-separation efforts and performance at the company, a departure from an equal division may be deemed fair.

The courts are well accustomed to dealing with sharing such assets and often adopt an approach where the wife receives her share of the unvested stock as it vests, potentially on a tapering percentage basis to reflect the husband’s ongoing performance at the company. This ensures both parties share any value the stock has on vesting, but also takes into account the risk of it becoming worthless. This is, however, not the perfect solution because it goes against the “clean break” principle enshrined within family law, which aims to sever financial ties between parties upon divorce. 

An alternative is for both parties to agree a value for the unvested stock now, allowing you as the wife to be bought out of your marital interest. If your husband does not have sufficient cash to buy her out, the agreed value could be offset against other assets, such as property. This approach tends to be less common, due to the challenge of accurately valuing unvested stock and the inevitable unfairness if your husband’s eventual return on the stock differs significantly from the agreed value.

Ultimately, there is a balance to be struck between achieving fairness and ensuring a clean break. The emotional toll of divorce cannot be overestimated, and prolonged financial entanglements can exacerbate the stress and anxiety experienced by both parties. You should not overlook your husband’s stock options or feel pressured to agree terms that would put you at a financial disadvantage.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to money@ft.com.