How much could you make from renting your house out while you're away

London rooms top £100 per night


keychain figure of house and...

More than three million Brits are planning to take strangers into their home this year, either through a short-term let while they're away or through a house-swap.

And according to insurer Direct Line, they'll be doing rather nicely, averaging £54 per night in rental income. Unsurprisingly, Londoners see the biggest profits, charging £116 per room per night. At the other end of Britain, the Scots charge the least, averaging £31 per room per night.

However, not all this is profit. Homeowners will need to take into account agents' fees, legal fees, increased utility bills and any services such as cleaning.

There's also the question of breakages. The Direct Line research revealed that only 29 percent of homeowners who say they're rented out a room report never having incurred any damage. In total, says Direct Line, damage from tenants costs home-owners £1.4 billion a year.

"Short-term lets can be a fantastic means of generating additional income, especially around holiday season," says Louise Lumley, head of Direct Line's Select Premier Insurance.

"It is vital, however, that homeowners take the time to protect their properties, as bills to repair or replace items as a result of damage can be expensive and may cost more than the amount earned from the rental."

The average bill for repairs and replacement is £326, with one in ten home-owners reporting bills of over £1,000. One in four say they've experienced theft. Sometimes, though, they're unable to claim on insurance, as letting out rooms isn't covered. "We recommend property owners inform their insurer, as their requirements may be different if letting out their home and this will protect against damage caused," says Lumley.

The government's Rent a Room Scheme allows homeowners to earn up to £4,250 per year tax-free from letting out furnished accommodation in their home. While Londoners have up to now had to get a council permit in order to let a room on a temporary basis, this requirement is shortly to be scrapped.

There are a range of companies matching homeowners and tenants, including AirBNB, Spareroom and Wimdu.

But renters do need to take some basic precautions. They will need to contact both their insurer and their mortgage provider to get approval. It's also common sense to get references. Tenant Screening will check out a tenant's ID and credit history in a couple of hours for £9.95, or carry out a full reference check (taking two days) for £19.95.