Earn tax-free cash from your property
Under the government’s rent-a-room scheme, you can earn £7,500 a year tax-free letting furnished accommodation in your own home, so if you have a spare room, why not make it pay?
You might not feel comfortable letting a stranger into your home, but letting a room is a great way to earn some extra cash and you don’t have to have a full-time tenant unless you want one.
You can let a room midweek-only if you’d prefer to have the house to yourself at weekends, or you can just take a tenant for a short period of time.
If the room is only vacant for limited periods, say during term-time while your child is studying at university, you can just let it for a few weeks at a time.
Where to find tenants
There are plenty of places to advertise you vacant room and you shouldn’t have to pay much, if anything, to find someone suitable.
Spareroom.co.uk is a very popular website among flat-sharers and those looking to rent a room in someone’s house You can specify how long the room will be available and whether you’re looking for a tenant seven days a week or just Monday to Friday.
Advertising with Spareroom.co.uk is free, but tenants can only contact you during the first seven days your advert is live if they have paid for ‘Early Bird’ access. If you want them to be able to contact you immediately, or you want the ability to contact tenants who advertise for rooms, you’ll need to pay about £10. It’s probably worth it.
For weekday-only lets, you could try fivenights.com or mondaytofriday.com. The former is free but the latter charges about £30 for an ad.
If you only want to let your room occasionally, you can advertise it on the holiday lettings site Airbnb. You can state the dates your room will be available and change this at any time. It’s free to place an ad but Airbnb will charge you a commission on all bookings.
You could also consider taking foreign students, especially if you live close to an English language school. Often the students are only looking for accommodation for a few weeks at a time and you can sometimes earn extra money providing meals too, although this isn’t necessary obligatory. If this appeals to you, contact the schools or colleges direct.
The legal stuff
If you earn more than £7,500 a year from letting a room or rooms in your home, you must declare this to HMRC and you’ll be taxed on the surplus. You should also inform your contents insurance company that you have a lodger.
You don’t need to protect any deposit you take from the tenant if you’re a resident landlord.
If you share a kitchen, bathroom or living room with your tenant, they’re what’s called an ‘excluded occupier’, which means you can decide how long you want them to stay and you only have to give the a ‘reasonable’ amount of notice to leave.
For further information, including information on tax and your tenant’s legal rights, go to the government website.