There is a bedding in the attic of the smithy, and nobody minds if Leofric uses it. The bakery is used more often, and would give less privacy.
Spreading the load between the three hamlets of Ayesgarth, it should not be too hard to collect the alms needed to live as a humble mendicant friar, especially not when he puts in both hard work and skilled smithing. That's tolerated. I think it takes some kind of social roll to be loved, though.
Leofric still does his best, holding a short mass on sundays and working through the week for those who need it the most. As well as visiting the Oak Circle every so often to make those implements that the covenant needs as well as provide religious counsel for the grogs who are Christian. He invites them to visit the hamlet on sundays as well.