Make Money By Renting Out Your Spare Room
Take In A Lodger, Rent Out Your Spare Room, Make Tax Free Cash.
Your home is probably your biggest single asset and it is almost always the biggest single expense in most peoples budget. It doesn't matter whether it is a house or an apartment, if you could do with a little less space in return for what could be a lot more cash it could spell the end of your financial problems or at least help to reduce them.
Take a good look around your home, keep an open mind, is there a room that you don’t really need to use, somewhere that is not being used at all perhaps? Have you ever considered how much someone might be willing to pay for that spare room or other space that you never use?
It doesn't necessarily have to be a bedroom. Be creative, do you really need to store all those things in that otherwise unused room? Do you really need a study or office? Could it be time for a clear out in the box room, time to free up some valuable space that you could turn into regular tax-free cash?
Even if you do not own the property it may still be possible to take in a lodger and make some tax free money but be sure to get the permission of the property owner or their representative, first.
As more and more people struggle to afford mortgage repayments, the financial incentives for taking in a lodger become obvious. From the landlord's point of view it helps to cover the mortgage repayments and, for the lodger, it provides the chance of living in a good standard of property that they may not be able to afford on their own.
The fact that the landlord lives in the property as well as the tenant, means that many of the problems encountered by tenants with regards to the standard of repair and maintenance, are avoided. It also means that the landlord is able to keep a watchful eye on the behaviour of the tenant when it comes to looking after the property, its furnishings,appliances and other items.
It goes without saying that you should take care when taking in a "lodger". Always try to meet the interested parties in person if you can and make sure that you would be comfortable with them sharing your space. Remember, they will be sharing many of your facilities, places and things that, hitherto, you have probably had all to yourself.
The old image of a lodger as a down at heel stranger is no longer valid. These days many lodgers are professionals who simply can't afford to buy but who want a good standard of accommodation rather than just somewhere to crash out.
Its very important to make clear what is and what is not acceptable behaviour when you accept someone to share your home with you. Untidiness, out of date food growing mould in the cupboard or fridge, toothpaste all over the washbasin, food splashes on the cooker, all of these are examples of things that could spoil the house sharing experience for you and for your new housemate so its best to make it very clear from the outset what is and what is not acceptable.
It may also be desirable to work out and agree timetable for the use of certain shared facilities such as the cooker, shower, washing machine and so on.
You should also make it very clear from the start if you do not approve of smoking and/or drinking alcohol and both parties should agree on any arrangements that are to be made in order to deal with these. The position on such things as loud music and having guests to visit or stay overnight should also be clarified.
Please give some thought to the matter of insurance and make sure that your existing policy gives you sufficient cover. Some insurance policies wont cover you at all for renting out part of your proerty so It may be necessary to take out additional insurance and you should discuss this with an insurance broker.
If you feel that you could deal with all of the above, you should give some thought to the paperwork. These days, many people leave it all to a letting agency. Yes, they will take a cut in return for their services, but it could well be worth it just to make sure that everything is in order and to have the onorous duty of collecting the rent taken care of.
There are now specialist agencies, including online agencies, that deal specifically with renting out spare rooms, flat sharing and house sharing.
Many people nowadays just need to rent a room for the weekdays and return home for the weekend. This may suit people who would like to rent out their space during the week but who would like a bit of privacy at the weekend.
Under UK tax law there are now significant benefits for those wishing to rent out a part of their home. This is thanks to a new scheme aimed at those with such a space in their main home, (second homes do not qualify for the scheme). It is called the Rent a Room scheme and it allows you to earn up to £4,250 tax free by renting out a room in your house. The space cannot be totally self-contained however, with a separate entrance, this scheme is aimed at sharing.
Whatever your circumstances, whatever your situation as regards money, if you have some spare space and don't mind a bit of company, renting out your spare room by taking in a lodger could improve your finances no end.
Useful Links & Further Information
- Rent Out Your Spare Room
Even if you've never considered taking in a lodger before, it may be worth thinking about it now. Many of us have some spare space that we no longer use.