How to make money letting out your spare room – Money tip # 157
Demand for short-term lettings in the UK is likely to peak this summer as the Olympics is coming to London and people will be looking for somewhere to stay at a reasonable cost.
One of the most interesting facts is that under the Government's 'rent a room' scheme letting income up to £4,250 per year is totally tax free, providing the room offered is furnished.
To help locate a tenant websites such as Airbnb.com and Windu.com will carry out this task for a reasonable fee. Rooms are normally let on a nightly basis, but longer lets can be arranged, with rents at about £50 per night for a double room in London. Fees charged to a hosts are around 3% of rental income with a further 12% charged to the tenant.
If you are contemplating letting out a room you will need to check with your insurers that your property and contents cover is adequate. Also, if you currently have a mortgage then you will need to advise your lender to ensure that they are comfortable with the arrangement.
Obviously, letting a complete stranger into your home requires a high degree of trust but if you use a reputable agent that carries out comprehensive checks then it can be a 'nice little earner'.
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