Again I am here with an effortless and safest way to make money. If you have an empty spare room, why not put it to work and bring in some extra money by renting it out?
Perhaps your children have left home, or eliminated the clutter that used to be stored there; whatever the reason your free room is free, it doesn’t make sense not to use it.
The good news is that the changes announced in this year’s Summer Budget make renting a vacant room much more attractive from April next year.
Under current rules, you can earn up to £4,250 tax-free each year by renting one or more furnished rooms in your home. From 6 April 2016, this limit will rise to £7,500 much more generous.
10 Things You Need to Know to Make Money
Here’s what you need to know if you plan to host a guest:
1. Advertise your room
You should promote your room to potential tenants. Job bulletin boards are a good place to start, or just spread the word among friends.
There are also many websites where you can advertise your room to guests, including MondaytoFriday.com and spareroom.co.uk.
Remember to decide how much monthly rent you want before you advertise your room and make it clear which bills are and are not included in this figure.
2. Check your tenants
It is not necessary to question prospective guests before allowing them to rent their rooms, but it is a good idea to do some background checks.
Request a written reference from a previous landlord or your employer if you have not previously rented.
3. Write an inventory
If you leave the room furnished, write an inventory of everything in the room and any existing damage, such as marks on the walls, loose cabinet handles, etc.
This must be signed by you and your guest at the beginning. That way, if there is any doubt about a broken lamp or anything else, you can show the inventory as evidence that it was not damaged before your guest moved in.
4. Decide how long to leave your room
You will need to establish how long you want to leave your room from the beginning.
You and your guest can agree on a fixed period in advance, say six months, or you can decide to check things out monthly.
Further, you should also keep in mind the amount of notice that must be given if any of you want the agreement to end.
5. Establish some ground rules
Make it clear from the start what you expect from your tenant. If you don’t want them to come in at 3 a.m. every Saturday or listen to loud music in your room, you should let them know your preferences.
It’s a good idea to write down what your expectations are from the beginning, but you’ll also need to make some commitments.
6. Know what facilities you need to provide
Don’t forget that in addition to having access to your free room, your guest will also need to use a bathroom and, by law, also need access to a kitchen.
It’s up to you if you’re happy to have them use your living room or any other room in your home.
7. Tell your mortgage lender
If you have a mortgage on your home, you should inform your mortgage lender that you are planning to rent a room.
This is unlikely to cause problems, but if you don’t notify them, you could end up defaulting on the terms of your mortgage.
If you are a tenant, you should check with the landlord to see if it is okay for him or her to accept a tenant. This information should be shown on your lease.
8. Also, inform your insurer
You should also inform your home insurer that you are taking in a guest, as this could affect your coverage.
Check the policy exclusions in your wording to see what your position is. If you don’t tell your insurer, you run the risk of invalidating your policy.
9. Request a deposit
It is customary to request a deposit in advance when renting a room. This will provide security in case your guest decides to leave suddenly because of your money, or if you damage any of your belongings.
It’s up to you to decide how big the deposit you want is, but most people ask for a month’s rent.
10. Check the municipal tax
If you live alone, you are entitled to a 25% discount on your municipal tax bill. If you accept a guest, you will lose this discount and must inform your council.
However, there are exceptions.
For example, you should not lose your discount if your tenant is a full-time student, but should always check with your local authority.