Have you ever wondered how much extra money you could make by renting a room in your home? House sharing (or flat sharing) is becoming more and more popular in the UK, and is now easier than it has ever been. Just sign up to EasyRoommate.co.uk and they’ll do all the hard work for you!
Have you ever thought about renting a room in your home? Do you have a spare room which you don’t use all that often? Are you looking for ways to earn additional income? Well, why not house share to turn that spare room into a money making machine? Anyone who owns a property and uses it as their main residence can have a tenant under the Rent-a-Room scheme. Additionally, if you pay rent to live in your home, you can also use the scheme, so long as the terms of your lease allow you to have a tenant.
Its really easy to rent a room in your home, and we will show you how to do it safely, efficiently and profitably!
Renting a room in my home – what do I need to do?
Firstly, you need to find a tenant. This can be done through letting agents, but obviously this has very high associated fees and this isn’t usually their man source of business and hence may not be experts. Alternatively, you can advertise independently, through sites like gumtree.co.uk, which is a frequently used source for advertising a house share. However, you might also struggle with this as you cannot determine the quality of your future guests.
Instead, we would recommend a company who does this for a living (excuse the pun)!
EasyRoommate is the web’s number one flatshare and houseshare site. Their business is to connect people wanting to rent a room with those people letting them out. Their UK focused site contains 50,000+ listings in 30,000 locations across the whole of the UK, and there are 2,500 new sign ups daily. Visitors can post a room or person profile on the site for FREE and upgrade to a membership to make contact with other users. This is similar to an online dating model, and ensures that you know that you’ll get on well with your prospective housemate!
Housing a tenant – what does the law say?
Hold on there tiger. Before you get going, here are a few things to keep in mind when renting a room in your house. However, there are several things that the law states you have to do if you decided to house share. Also, there are some common sense tips, but you’d be amazed by how many people forgot these things! You should make sure:
- Your gas appliances are in good order and that gas boilers are checked each year by a CORGI-registered engineer.
- Electrical appliances and the electrical system are safe to use.
- Your home complies with fire regulations.
- Keep the property clean will help to prevent arguments.
- Mend or replace any broken items promptly, especially in the tenant’s room.
- If you are (or aim to be) a live-in landlord, make sure you treat tenants with respect and courtesy.
- Don’t go into their rooms without asking permission.
- Be tolerant of them having occasional guests.
- Don’t keep them awake with loud music.
- Respond helpfully to reasonable requests from them.
How much could I earn renting a room in my home?
Renting out a room in your home is similar to renting out a house or flat. Your room will have a “market value” depending on its quality, location, length of rental, facilities, etc. However, you ultimately have the decision as to how much you want to charge. Often tenants will be looking for a hefty discount compared to renting a one-bedroom flat. This is due to the reduction in privacy they will receive when sharing facilities. However, the average house share offering a double room in London is about £150 per week, or £650 per month.
Assuming you rent a bedroom in your house for £650 per month, after 25 years, with compounding 10% return (obtained from investment in stock market ETFs), you would have around £770k. This kind of income over the long-term certainly makes the prospect of having a housemate much more appealing. It more than pays for your entire house over this length of time!
Even better news…
IT IS TAX FREE! Yes, really. In this life where nothing is certain but death and taxes, there is actually no tax on income earned on rent a room. Well, to a certain extent.
The gov.uk website confirms that “the Rent a Room Scheme lets you earn up to a threshold of £4,250 per year tax-free from letting out furnished accommodation in your home. You can let out a room or an entire floor.” Therefore, if your rental is less than £350 (which it will often be outside of London), then you could avoid paying any tax.
Isn’t it dangerous to have a stranger in my home?
For obvious reasons, there are some safety concerns about letting a stranger into your house. However, there are many steps you can take to mitigate this risk:
- Perform background checks on the person, both personal and financial
- Check online social profiles of the person in advance
- Work with a letting agent who have the potential tenant’s history in other flats/houses
- If you are a female, you could advertise for a female only flat share to make you feel safer
Also, as we previously noted, screening your future housemate is made easy by services provided by companies like EasyRoommate.
You also don’t need to rent out a room full time. The latest trend, particularly among people in larger cities, is to rent out a bedroom in your house from Monday to Friday only. This means that you can earn some decent extra income, but also keep your freedom (and have a spare room for visitors) at weekends.
This is known as fractional letting. It is very popular with tenants who want to live near work during the week but return home at weekends. It is easy to find weekday lodgers on specialist websites such as Mondaytofriday.com. They charge an admin fee (around £29.95) to post your room online for three months. However, this is often less than equivalent agents fees.
Renting a room in your home – Conclusion
- You do not have to declare any income from letting a room (or rooms) up to £4,250 per year. This saves you the hassle of adding up bills and expenses, such as accountancy fees, cleaning services or council tax, to offset against your income. If your income from letting a room is less than £4,250 per year, you may not have to submit a tax return at all. If you don’t normally receive a tax return, you wouldn’t have to do anything.
- If you advertise for a tenant, it’s worth adding a photograph or even video of the room and the living areas. You’ll get far more responses to your advertisement than those with no pictures, and it helps people to know what to expect.
- It’s important that you and your tenant understand in advance what you expect from each other. And if a tenant requests a written statement of the main terms of the tenancy agreement, then you are legally obliged to provide one.
So, what are you waiting for? Go find yourself a housemate today!