Rent a room
Have you got a spare room in your house? Do you fancy earning some extra income? Are you struggling to afford your mortgage payments? Maybe you should consider renting out a room in your house.
Rent a Room Scheme
This scheme operated by HMRC allows an individual or a couple to earn a certain amount of income from renting out accommodation in their only or main home, tax free. An individual can receive up to £4,250 per year tax free or £2,125 each if letting jointly. The accommodation must be furnished and the scheme does not apply if the accommodation is converted into separate flats.
You can be a home owner or tenant to participate in the scheme. If you are a home owner you should check with your lender and insurer that you are not breaking the terms and conditions of your agreements. If you are a tenant it is essential that you make sure your lease allows you to take in a lodger.
For further information read or visit GOV.UK - Rent a room scheme.
Finding a lodger
There are many companies that match prospective lodgers with landlords. These can be found on the Internet by typing 'rent a room' into a search engine.
You can also advertise via local newspaper classifieds or put notices up in local shops etc.
You must adhere to safety regulations if you are renting out any part of your home. The legislation covers gas and electrical fittings as well as furniture.
Gas Safety (Installation and Use) Regulations 1998
All gas appliances must be maintained by a Gas Safe Registered engineer and checked every year. You must issue a copy of the safety check to tenants within 28 days. New tenants should see it prior to moving in.
Electrical Equipment (Safety) Regulations 1994
Electrical equipment used in your property must be safe. In addition, there must be written instructions for use and the equipment should be checked on a regular (preferably annually) basis by a qualified NIC electrician. Again, show your tenant the written guarantee confirming this check has been carried out.
Furniture and Furnishings (Fire) (Safety) Act 1988 (as amended)
All furniture, bedding and fitted fabrics should contain a manufacturer's label confirming it is fire-resistant i.e. that it passes both the 'match' and the 'cigarette' test. In addition, bed bases and mattresses should conform to BS7177 guidelines.
You may wish to ask your lodger for a deposit to cover against damage or unpaid rent. Unlike assured shorthold tenancies, you are not required by law to register the deposit in a tenancy deposit scheme. However, it is good practice to protect deposits in a scheme and you get help with disputes over the returning of a deposit. For further information read GOV.UK - Tenancy deposit protection.
If you request a deposit it is advisable to take an inventory of furniture etc. when the lodger moves. This will help to guard against possible disputes later on.
You are not required by law to issue a written agreement for a lodging arrangement in your own home. However, you may wish to set out in writing the terms of your arrangement such as rent and notice periods. Examples of lodging agreements can be found on the Internet.
A lodger is termed an 'excluded occupier' which means you do not need to get a court order to evict them. This means that you can get the lodger out quickly if you need to, which gives you peace of mind when you are sharing your home with someone. When asking a lodger to leave you should give them reasonable notice, this can be verbal or in writing.