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When I was growing up, some good friends of ours always had lodgers in their home as we lived near a university. Mature students kept themselves to themselves and were always gone for the holidays when the children were off school. It was a win, win situation!
Have you ever thought about renting out your spare room to generate extra income? You can earn up to £7,500 a year under the Rent a Room Scheme before any tax is due (based on 17/18 tax year). Utilising a spare room in your home is potentially a great way to earn passive income from your home.
It’s something a lot of people could do in theory, but many don’t. Maybe it’s because of a lack of understanding around the tax implications, or maybe it’s the idea of a stranger living with you and your family. Either way, it doesn’t have to be as risky as it seems.
Instead of simply decluttering your house of all the things you don’t need and putting them on ebay, try a different approach to making money from your home. Here’s some of the considerations you should look for in your potential lodger.
Find a reliable way to let
Finding a reliable and trust worthy lodger is the most important step in letting someone camp out in your spare room and share in your amenities. Facebook and Gumtree are fine for selling your old clothes, but you will want the security of finding a tenant through a more reliable means.
Instead, use an agent such as nest property agents. An agency will use trained professionals, with knowledge of your local area to advertise for and vet potential lodgers for you. They have wider reach than you through their connections within the industry, Plus, they will complete all the necessary checks so there is that peace of mind for you too.
The legal requirements before you take a lodger in
There are a number of checks you need to perform before taking in a lodger.
- You must have a record that the person living with you is legally allowed to do so, and thus background checks are essential.
- Any potential lodger must have the right to live in the country so you will need to have evidence of this. Make sure you have their permission; a simple form they have to sign, allowing you to keep their data on file.
- If you are the owner of the property and have a mortgage, you’ll need to check with your mortgage lender to make sure you’re allowed to rent out a room under the terms of your mortgage contract.
- You’ll also need to check with your home insurer that it is allowed under their terms.
- If you’re renting, you need to ensure that your lease allows you to take on a lodger.
- Speak to your lender, insurer or landlord to ensure you can take part in the Rent a Room scheme.
Once your agent has vetted potential candidates, then you will need to choose the one who is the best fit for you. There’s no better way to scope out someone you want to have living with you than having an interview in your own living room.
Make sure you ask them about their habits, what they get up to outside of work, whether they’re going to need to be coming and going all night, and whether they have other connections in the area. Then ask them why they want to rent out your room, and trust your instincts when it comes to their answer. You all need to be comfortable with the arrangements so look for someone who works with your own lifestyle and understands those terms.
It’s probably advisable to interview them at least twice, and with all members of the family at least meeting them first, to help narrow down a list of applicants. Then pick the person you like the best.
It could be the start of a beautiful friendship!
This is a collaborative post.