Have you got a spare room in your home that you'd
like to rent out? If so, you could earn up to *£4,250.00 per year
tax free for renting out a room in your house or flat - (£2,125
if letting jointly). This is part of the 'Rent a Room' Government Scheme
for people who want to rent out their rooms in their only or main home.
So, if the income you receive for the room is below £4,250, which
is approximately £350.00 per month, it's yours tax free. Unless
you do so already, you won't even have to fill in a tax return for your
earnings unless they exceed this amount. If you are working and earn
more than £4,250.00 per year, you will still have to pay tax on
renting out a room, even if the rent is lower than this threshold.
Is this a good way to earn some extra cash? This really all depends
on you and how you'd feel about sharing your home with someone new.
Your lodger will have to have access to part of your home, i.e. bathroom
and kitchen, so you will have to accommodate them for this. If you're
the type of person who likes his/her personal space and privacy then,
perhaps, it mightn't be a good idea. However, if you are happy to share
you lodgings, then here are some ground rules:
Firstly, it's important to find out if you are authorised to rent out
your spare room. Here are a few pointers:
Once this is done and you are happy to proceed, the
next step would be to prepare the room. You will need appropriate furnishings
to accommodate your lodger. If you plan on using the 'Rent a Room scheme'
to earn a tax free income you will need to provide a fully furnished
room. But as a general rule do make sure that your lodger is as comfortable
as possible as this will create a good ambience and make your reputable
landlord!
Who will your tenant be? That's your choice, of course, and it might
be a good idea to have your tenant profile planned before you start
advertising. For instance you may want to rent your room out to foreign
students on a short term basis, females only, UK students or people
who are visiting the UK for a shorter stay. Many professionals who live
outside of major cities now rent rooms closer to work during weekdays
to save on costs, time and energy.
As a landlord you will need to make some ground rules.
Decide on these rules prior to interviewing and make your terms and
conditions known from the onset to avoid any misunderstandings at a
later date. Let them know who will be accountable for what. Make a list
of do's and don'ts and get a signed contract to protect you and the
tenant.
Do ask your prospective lodger for some references and make sure you
do a thorough search on the person you decide to accommodate. You may
also wish to do a credit search to ensure that all is okay. It's imperative
that you house someone who is trustworthy and safe, particularly if
you have children or if you are a woman living alone.
So, how much will you charge for your spare room? There are a number
of issues that will determine the price. Location, type of property
(rooms in house or flat with scenic views or/and garden will go for
more than flat on tower block), and standard of accommodation (well
finished, modern and comfy accommodation will go for more than minimal).
Do a bit of digging before you place your ad - find out how much other
landlords are charging for similar rooms in your location at. You can
do this at spareroom.co.uk,
and then work out a cost based on your findings. Don't overprice as
you are less likely to find a tenant willing to pay over the odds. Do
ask your lodger for at least one month's rent upfront to ensure you
are covered for any unpaid bills/rent/damages. This is quite the norm
and people will be prepared to pay a deposit on agreement.
The final step is to advertise your spare room. You can reach over 1000
room seekers on Spare
Room . Placing an ad is free. Find
our more.......
Find our more about the Rent
a Room Government Scheme here....
If you need any further advice contact The National
Landlords Association with any questions.
