These days, living on a single paycheque is nearly impossible to do.
A simple way to solve this crisis is through renting out rooms in your house, either on a full-time or temporary basis. There are a few concepts involved in this type of tenancy, so I’ll be sharing these with you in two parts.
In this first part, we’ll be talking about a few considerations before you start and the basic rates for letting a room in the UK. If you’re ready then let’s get the ball rolling!
Ask yourself first if renting out an unused room in the house suits your needs and goals.
I hope I don’t sound like a broken record, but renting out spare rooms in the house is really a sweat-free way of earning additional income. You’re just utilising space that’s already in your house and all you need is some advertisement to attract the right tenant. What’s better is that you can apply this amount into paying a portion of your mortgage or other maintenance costs around the house.
Experienced landlords also recommend this type of tenancy, because tenants under this type of agreement don’t enjoy security of tenure. This means that they can be evicted out of your house even if you don’t follow regular notice procedure provided for under Section 21.
While there are a lot of benefits, not everyone can fit into this type of setup.
If you’re living in the house with children, it may not be advisable to let a total stranger enter your house that easily. Also, if you’re not accustomed to sharing common areas like the living room, bathroom, and kitchen space with other people, then letting out a room in your house may not be the ideal property investment strategy for you.
After reading all these considerations, if you’ve finally decided to let out your room, the next thing to figure out is how much you’ll charge for the room.
Like other rental properties, the amount of rent you can charge depends highly on where your property is located. A house located at the heart of large cities, industrial areas, or universities can expect to get a lot interest from tenants. And where there is high demand and low supply, it’s appropriate to raise your rates accordingly.
You’ll also have to think about whether you will collect rent on a weekly or monthly basis. Here’s a pro secret: some landlords claim that asking for rent weekly can help you earn more in the long run compared to asking for rent every month.
Under the Rent-a-Room scheme, you can charge up to £81 a week (£354 a month) without paying any tax on it – that’s a total of £4,250 a year. Anything over that amount and you’ll have to pay tax. Don’t forget to also factor in furnishings, the total space of the room, additional amenities such as personal pantries, as well as monthly cost of utilities.
If you have the free space and if you are willing to spend time screening possible tenants, renting out a room can be a fairly nice source of extra income!