If you are thinking of making some extra money from your home by renting out a room, well done you. Who’d have thought that the kids leaving home could be profitable huh? Under the Governments Rent a Room Scheme, you can earn up to £7500 tax free. Bonus!
As with life, there are things to cogitate and be aware of, here are my top 9:
Mortgage Lender or Landlord
There may be exclusions on your mortgage for renting a room out so it is best to check. Same applies to your landlord if you are renting; I rented a private home through an agent, the tenancy agreement of which contained a specific clause prohibiting me from subletting a room. However, if your landlord is the Council or Social Housing you are probably ok but still, always best to check (it might affect any benefits you recieve!).
This might be invalidated by renting out a room, so before embarking on this, do check your policy. There are policies out there for landlords taking in lodgers if your existing policy doesn’t allow it.
Not every landlord chooses to have a formal written agreement with new lodgers but if you do, there are some things it should contain. These are suggestions: the cost of the rent; what’s included eg all utilities; when and how payment should be made; how long the agreement is for; how much notice is required on both sides. You may wish to also include any extras you have agreed upon such as laundry and meals. I would also advocate an inventory of furniture in the room, including any existing damage.
It is expected by any new lodger that you have certain likes and dislikes, ways of doing things and this is what the “house rules” are for. An example of this might be a quiet house after 11pm, no outdoor shoes in the house, cleaning the kitchen immediately after use and so forth. It is best to be upfront with lodgers right at the outset so there can be no misunderstandings. It makes for a more successful agreement.
Once you have made your decision to rent out your room, you need to contemplate what will be included in the agreement. Things such as parking, outside storage (for camping equipment, skis, surfboards etc), use of communal areas of the home, unlimited wifi and so forth.
Privacy and Security
Common sense dictates that once you have complete strangers in your home, no matter how well you get on with them and even if your instincts about them are good, it makes sense to lock away your valuables. Investing in a home safe will reduce your contents insurance and take away any worries. I would also advise investing in a firebox in which to keep valuable documents such as mortgage agreement, insurance certificates, passports, vehicle ownership paperwork etc.
There are probably very few people these days who would not want internet usage as part of their room rental. Most use it for surfing the net and emailing as well as skype calls, watching TV online, downloading films and music. If your current internet isn’t fast enough for much beyond surfing the net and emailing simply because of your location, you must be honest about it. If however you just haven’t got a package that delivers unlimited broadband, enabling the high usage that incurs with watching TV, then I strongly suggest you upgrade.
Whilst having strangers in your home is a good experience, gets you out of your comfort zone and expands your community, there is no point having people in the house that you simply do not gel with. Think about the age range that you are willing to have, their lifestyle, diet, hobbies and activities, and so forth. Instinct will prompt you to ask pertinent questions and tell you if they are potentially the right fit or not. You may or may not wish to ask for references, that’s personal choice.
To qualify for the rent a room scheme, the room you rent out must be furnished. This means a bed, wardrobe, chest of drawers, bedside table plus lamp, a chair, full length mirror. Please make sure the matress is of good quality and not one that’s ok for occasional slumber in a spare room. When someone is going to be sleeping on it every day, their back needs to be comfortable and supported, so it’s worth investing in a decent matress.
Having tenants can be a positive, enriching experience. Do remember though, this is a business arrangement at the end of the day. You aren’t being altruistic opening your home to strangers, you are taking a business decision to earn extra money from your home.