Renting out your spare room: how much can you make?


spare room

Most people see the spare room as a bit of dead space. Three quarters of us have one, and for the vast majority of people it's just home to the computer, the model train collection, or a tonne of dust. But it doesn't have to be a waste of space, because almost one in ten people in the UK are using theirs to make a decent wedge of cash.

So how much money can you make, and what do you need to consider before you take this approach?

How much?

Research from Santander found that 1.7 million people in the UK have a lodger now. This is 9% of people, which is a striking increase from the 6% reported in 2011. They make an impressive sum of cash from their rental: on average it covers 27% of their monthly mortgage payments - or £164. And for some people it's even more lucrative - 13% say it covers 50% of their mortgage every month.

Those who have taken in a lodger find the cash a vital addition to the household. Some 11% use it to meet the mortgage payments and bills, while 15% use the money to supplement their disposable income. Interestingly money isn't the only driver - 35% of people have taken in a family member or friend.

Would it work for you?

The financial attractions are obvious, and it's not surprising that 34% of people told Santander that they would definitely consider renting out their spare room: 18% would do so if they needed to financially and 23% would rent out the room if a friend or family member needed it. Some 11% would consider it if they could find an appropriate tenant and 6% would do so if they were able to make decent money from it.

Phil Cliff, Director of Santander Mortgages, added that there are tax advantages to it too: "The UK Government's 'Rent a Room' scheme enables homeowners to earn up to £4,250 per annum tax free from renting out a spare room."

However, its not for everyone. The intrusion does not appeal to all people, and while you can carefully vet the background of any lodger - or only rent the room to someone you know well and trust - there is still a security risk of having someone else in your home.

However well you know your lodger, it's also important to have a written agreement so that everyone knows where they stand in terms of rent, and house rules. And you'll need to collect the rent by standing order to avoid any delays or awkwardness.

If you don't want a full time lodger, you can consider renting your room out by the night - so you can specify when it will be available. Organisations like Airbnb list people's spare rooms across the country, which can be rented by the night. They suggest this approach even be used by parents whose children have gone to university. They argue that the money can be used towards university fees - although they don't address the thorny issue of how to let your children know that their room will be home to a succession of strangers while they're away.

Cliff says that if you plan to rent a room in any way you need to check with your mortgage lender. He says: "We advise that before taking this step, anyone with a mortgage should speak to their mortgage lender to ensure they stay within the terms and conditions of their mortgage agreement."

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