Spare bedrooms can often become a neglected space and a haven for storing household and personal possessions that can’t fit anywhere else, and is probably used most of the time as a junk or overflow room than it is as an actual spare room for people to sleep in!
However, did you know that you could actually be making a profit on your spare room by utilising the space to rent out to lodgers? This notion is becoming more and more popular as people realise that for the first time in a long while, your spare room could actually be quite functional!
So if you’re stuck in the situation that your spare room isn’t doing much more than collecting dust and housing unused items, then you might just want to take a look at your options for letting out your room for a bit of extra cash.
Spare rooms offer plenty of rental opportunities
One of the most effective and popular ways to earn some money from your spare room is to rent it to a lodger.
People may decide to rent their rooms out for a number of different reasons. Perhaps your children have moved out meaning that you have even more space to utilise.
With room rents (excluding London) having increased by 5.01% in a year according to This is Money’s article published earlier this year, this is a fantastic time for those who are making a bit of extra money by renting out their rooms.
One of the great benefits of renting out your room is that you have the flexibility to set your own terms of contract to suit your own personal needs.
For example, if you’d prefer to rent out your spare bedroom for just a few months, or perhaps from just from Monday to Friday, being a popular demand amongst business people, then the ‘temporary’ nature associated with room lodgings is that you have the control to determine how long for and when you would like to rent the room for.
Another important advantage for those looking to rent out their spare bedrooms is that The Government’s Rent A Room Scheme means that you can earn up to £7,500 of rental income tax-free which has recently been raised from £4,250.
How do I go about renting my room?
If you’re interested in renting your room, then the next step would be to contact a company such as RoomBuddies who’ll be able to assist you in advertising your room and locating you an appropriate lodger.
You will be required to fill in a number of details including information regarding the room and property, as well as details for tenant preferences.
Will I need to complete a tax return?
As already mentioned, you are entitled to earn up to £7,500 of rental income tax-free. If the money you earn is less than this amount, your tax exemption is automatic meaning that you do not need to do anything.
However, if you will be earning above this threshold, then you’ll have to complete a tax return.
Once registered with HRMC, you will then have to ensure that you retain a record of your rental income. Once you are a sent a self-assessment form, you will add this amount to the rental income tax.
Contact your mortgage lender
Before allowing a lodger to rent your room, it’s also important that if you are the homeowner and have a mortgage, that you ensure you’ve checked with your mortgage lender that you’re allowed to rent out your room which will be stated under the terms of your mortgage contract.
If you are not the homeowner and instead rent the property, you will also ned to check that your lease will allow you to have a lodger. Ultimately it is essential that you have spoken to your lender, insurer or landlord before taking on a lodger to make sure that you’re eligible to participate in the scheme as advised by The Money Advice Service.
Whilst it might not be for everyone, there are certainly a number of advantages to be had with renting out your spare room, the biggest benefit being that with rental prices seemingly on the increase, it could end up being a fantastic little earner!