If your property has a spare room, renting it out lets you make passive income. With an assured shorthold lodger agreement PDF, you can even customise the lease as you see fit. In this post, we’ll help you navigate renting out spare rooms.
Should You Rent Out a Spare Room?
As rental and mortgage prices rise, many property owners are taking on lodgers. This lets them offset climbing costs and get some company in the process. However, you’ll have less privacy and will take on a landlord role – likely for the first time.
You might even lease out the room for short-term stays on sites such as Airbnb. Taking a tenant full-time won’t always be convenient for you. You might, for example, need the room for when a family member visits. Becoming an Airbnb host gives you extra flexibility over your property.
If you’re a tenant rather than an owner, you could look into subletting. This is when you rent out a room in your home, even if you don’t own it. However, most tenancy agreements forbid this. In these situations, a landlord is more likely to want a tenant of their own in the room.
Advertising Your Spare Room
You can post listings for your spare room on any major rental site. Even if the room is only going to be available temporarily, you can offer short-term stays. In addition, some landlords only rent out their spare rooms Monday-Friday.
Even if you’re just advertising a single room, post photos of the full property. After all, they’ll also be paying to use the communal areas. If possible, provide a floor plan. You should be upfront if you don’t want pet owners, smokers, or couples to apply.
There are also sites (such as SpareRoom) that explicitly provide extra rooms in homes. These could make it easier to find people more comfortable with lodger-based arrangements. No matter the site you use, be honest about what the property has to offer.
Pricing Your Spare Room
You must give your room a fair price. If it’s too high, you’ll get fewer model tenants applying. You also might get a poor reputation. Check the rental market in your area and make sure you don’t go notably higher than the average weekly or monthly price.
You should also adapt your prices to your situation. Are you only offering a short-term stay? Is it only for five days a week? Any of these questions can affect your price. UK rent is always rising, but high prices can make it difficult to live with your lodger.
Screening Your Potential Tenants
Once the applications flood in, you need ways of narrowing them down. This means carrying out a series of checks to make sure tenants are viable choices. For example, you should check their credit score. This helps you see if they’ll be able to repay debts and keep up with rent.
Similarly, it may be worth conducting a full background check. Landlords can even ask potential tenants if they have a criminal record. However, they only need to disclose unspent convictions.
You should also look over the tenant’s rental history. This means asking upfront if they’ve ever faced eviction. However, even without any evictions to their name, they could be far from a model tenant.
Contact your potential tenant’s past landlords to get their opinions. Ideally, they’ll tell you that the renter you’re looking at would be a great choice.
Setting Clear Rules and Boundaries With Lodgers
As someone taking a lodger, you’ll occupy a unique position. Specifically, you’ll be your tenant’s landlord and housemate. There’s a chance that this may cause some friction. Here are just some of the issues that could arise:
- The tenant might struggle to see you as a potential friend.
- The tenant might use your kindness to avoid paying rent.
- The tenant might want to discuss landlord-related queries at all hours of the day.
- The tenant might generally neglect the rules, even in your presence.
To help with this, set “landlord hours” during which they may talk to you about the home. This can give you an idea of when the landlord-tenant dynamic is in effect.
The Rent-a-Room Scheme
The UK government’s Rent-a-Room scheme encourages people to rent out their spare rooms. If you take part in this, the first £7,500 you get from the spare room will be tax-free. Even if you’re using your home as a B&B, you’re eligible for this scheme.
However, you can’t claim letting-related expenses under the Rent-a-Room scheme. If you don’t opt in, you can deduct these expenses from your total taxable income.
Final Thoughts
With the right planning, renting out a spare room is easy. You can even customise an online UK rental agreement to fit this type of tenancy. You’ll earn extra (possibly tax-free) income and can make sure you get a model tenant.