You only have to visit the local supermarket or check your mortgage payments to realise that almost everything is getting more expensive. The cost-of-living crisis means that more people are looking for additional sources of income. If you have a spare room sitting empty, you won’t be the first to think: ‘Can I rent out rooms in my house to make extra money?’ There has never been a better time to rent a room in your home.
Why should you rent out a room in your house?
Aside from the benefit of earning extra income, renting a room out in your house has plenty of benefits. Maybe your kids have left home, or you have an extra bedroom spare. You could make extra money by renting it out if it's not being used.
Tax benefits
Government backs the rent-a-room scheme, which means you can rent out a room in your home tax-free up to a threshold of £7,500. That’s extra money that will be 100% yours. The tax exemption is automatic; you can rent out as many rooms of your home as you like. The accommodation must be furnished and in the landlord’s name to qualify.
Meeting new people
A person who rents your room will also provide comfort and company if you live alone. You can find good lodgers if you implement a good vetting process, do background checks, and get references. Your home will be more secure when you are away, and you may find your social life improves too.
However, sharing your space and bills with new people can be difficult to get used to. HyperJar has the perfect solution for sharing expenses. The sharing Jars feature will make renting a room in your house easier as you can easily share a jar with your lodger to make saving and spending more manageable.
Become a landlord
If you dream of becoming a landlord one day, renting out a room in your home is a great stepping stone. You’ll gain valuable experience in the renting world that you could use to become a landlord.
Tips for renting out a room
In this section, we’ll show you the essential steps you need to take to begin renting out a room in your house.
Advertise online and through word-of-mouth
If you have a room to rent out, you need prospective lodgers to see it. You can do this by asking friends and family if they know anyone looking for a room, sharing your room on social media, or using platforms like OpenRent. Make sure the room looks clean and presentable, and take good-quality photographs to showcase your room best.
Establish the length of the tenancy and the tenant’s responsibilities
You need to think about how long you like to have a lodger. Would you like the lodger for the short or long term? To begin with, simply establish the length of the tenancy you’re comfortable with. Renting your room is flexible; you can always extend it if things work out. You also need to set out ground rules and boundaries for the lodger that is clear before they move in, such as:
· Access to rooms in the house
· Cleanliness
· Noise
· Rent due date
· People staying over
· Parties
Vet your tenants
Vetting your tenants is the most important part of renting a room in your house. Your safety is important, so you need to be sure they’re generally nice before inviting them to live in your home.
Meet them in person or go for coffee to get to know them. Find out their interests, what they do for work, or how sociable they are. You don’t need to do a complete interrogation, but asking the right questions will help ensure your living situation is comfortable and stress-free.
Request a deposit
Requesting a deposit is standard procedure when renting a room. It gives you the extra security you need and peace of mind that the lodger is serious about their renting responsibilities. You can request a set amount, two months’ rent, or a percentage of rent upfront. Explain that they will get their deposit back at the end of their tenancy if all the requirements have been met.
Write an inventory for your home
Before renting a room in your home, you should write a complete inventory. This includes everything in your home that belongs to you, including appliances, décor, and furniture. You should take photos of any pre-existing damage, such as dents in furniture or scuffs on walls, so from there you can easily identify any new damage.
You should also write an inventory for everything that is in the room that will be rented as evidence if anything were to go missing or get damaged.
Tell your mortgage lender
If you rent out a room in your home, you must ask permission from your mortgage lender. This is especially important if you are a leaseholder. If you rent your home, you must get your landlord’s written consent before renting a room. You should always check your tenancy agreement and mortgage terms before renting a room in your house.
Let your insurer know
Similar to letting your mortgage lender know, having a lodger can affect your home contents insurance, so you need to make sure that you let your insurer know. If you don’t, your policy could be invalid. If your lodger damages any of the contents of your home, insurance will protect you from having to pay for replacements or repairs.
Check your council tax, housing benefit, and universal credit
Although the rent-a-room scheme has a tax-free threshold, the additional income from renting out a room in your home could affect your council tax or your entitlement to housing benefits. If you are on universal credit, the amount you earn from taking in a lodger will not impact how much you get, but it could affect your benefit entitlement. You should speak to your benefits provider about how your payments will change.
Conclusion
With the correct information, renting a room in your house and getting a lodger can be a great experience that is beneficial for everyone involved – and it’s a great way to make extra income. When you have extra income, it’s easier to save more money to put toward the things you want. Our jars help you divide your savings into things like holidays, a house deposit, sinking funds, and even sharing expenses with your lodger.
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