For many homeowners, the spare room becomes a kind of storage cupboard for things that don’t really have a place anywhere else. However, it represents a superb opportunity to boost your income, and many people are seizing this opportunity by letting their spare rooms to lodgers.
There are things to consider if you want to make this arrangement work, one of which is to find a tenant whose lifestyle is a good fit for yours. For example, you don’t want your lodger to be sat watching television in the living room while you’re trying to host a dinner party.
If the lodger and the landlords agree on some ground rules at the beginning, the relationship can be mutually beneficial. The landlord gets an extra source of income and the lodger gets an affordable place to live. There is plenty of demand for this type of arrangement, so it can be easy to find a lodger and get things moving.
Here are 9 things to think about that might help you decide whether letting a room in your house is a good idea for you.
1. Think Rigsby
Did you ever watch the television series Rising Damp? Leonard Rossiter played the landlord Rigsby and rented out rooms to tenants. According to research from the insurance firm Liverpool Victoria, there has been a substantial increase in the number of homeowners renting out a spare room. 5 years ago, the figure was 1.4%, but today it has increased to 2.7%.
2. Wasted rooms
There are an estimated 15 million unused bedrooms in England alone. With so many people in need of accommodation, the demand for these rooms is sky-high. Data from spareroom.co.uk indicates that there has been a 70% increase in the number of landlords seeking lodgers since 2011.
3. Aberdeen is a popular location
With two universities, one college and a thriving offshore oil industry, there has been a 140% increase in advertisements for lodgers in Aberdeen over the past 2 years. A little under half these landlords say they would be unable to pay their mortgage without the rental income from a lodger. The demand in the Granite City means the average rent you could charge for a room in your house is now £550 per month.
4. The lodger can have a ‘weekdays only’ arrangement
If your lodger only needs to be in your vicinity during the working week, you can establish an arrangement whereby they only use the room on weekdays. This can be beneficial to both parties.
5. All-inclusive rent
Many lodgers will find the fact that their monthly payments will cover all bills very appealing.
6. Written agreements are important
It is strongly advised for both sides that a written rental agreement is drawn up. This will enable you to establish those all-important ground rules as well as formal business matters. One of the key things to work out is whether lodgers are allowed to have use of the living room in the evenings and at the weekend.
7. You get £7,500 tax-free
Your home insurance premium will increase if you take on a lodger. However, under the government’s Rent A Room scheme, you are entitled to £7,500 per year tax-free from renting out your spare bedroom. Any earnings above that are liable for tax.
8. Good monthly rental income
The average cost per month of renting a spare room is approximately £500 per month, or £650 per month in London. So your one spare bedroom could land you up to two thirds of the average overall rent for entire properties in the UK (currently estimated at £900 per month). There can be significant variation in rent, so for larger rooms ins prime locations you could charge more to your lodger.
9. Be aware of what you can and cannot do legally
If you plan to rent out a room, you are required to ensure your home is fully compliant with fire regulations. You must also ensure that your boiler is formally serviced every year and that all electrical appliances are safe and in good working order.
Check out: Landlord Legal Responsibilities