Incomes have been relatively stagnant in the UK for the last ten years after decades of consistent increases during the 20th century.
But rather than accept this halt in the improvement of the quality of life, many homeowners are looking for novel ways to make money from the assets that they already own.
Renting out rooms has exploded in popularity over the last few years, thanks to the growth of room sharing platforms and the desire of many people to find cheaper accommodation.
In this article, we’re going to look at the ways that you can make money from your spare room.
Renting Out Your Room For Short Stays
The law in the UK recently changed to make it easier for homeowners to rent out their properties for short periods without having to apply for planning permission.
The new rules say that homeowners can rent a room for up to 90 days without breaking the law, providing the perfect opportunity for people to make money from their spare rooms immediately.
The great thing about short-term lets is that you can use them to trial the idea of letting your home out for the long term.
Rather than hosting a permanent lodger, you can see how you and your family adjust to having somebody else live in the house with you for a few days or weeks. You may discover that it’s an easy and cheap way to supplement your income or that it’s not something that suits your lifestyle.
You could also use short terms lets as an opportunity to narrow down the type of tenant that you’d like to live with, be it a student, a young professional, or even a couple.
Short term lets also allow you to dip in and out of the market as a when you please. If you don’t want somebody staying with you over the Christmas period, you can just wait until the new year before putting your room back up for rent.
Because renting for short stays offers tenants increased flexibility, you can usually charge a slight premium over the yearly rate, making it more profitable than longer-term ventures, provided you keep occupancy high.
In our home, we have a separate garage on the other side of our garden. Around 50% of the garage is made up as guest accommodation. There is a bedroom, dining area, small kitchen area, and a bathroom. As we are located in a rural position, it would be a nice little holiday let.
It was certainly one of the things that appealed to us when we bought the property. However, we see that option as a last resort as we do like our privacy, but it’s good to know our spare room could be a nice little earner if we ever decided to rent it out!
Finding a Permanent Lodger
Unlike renting out your room for short stays, taking in a lodger is a more significant commitment, but potentially a lot more lucrative too.
While your room may sit idle for part of the year as a short stay let, a permanent lodger will pay you a consistent, fixed sum, month after month.
There are some potential downsides and special considerations, though for taking on a permanent lodger. Firstly, you’ll have to think carefully about how they will get on with the rest of the people in your home. Some homeowners with children may feel uncomfortable with certain kinds of lodgers in the house.
You’ll also have to consider the preferences and habits of lodgers.
Some might need to get up early in the morning because of their work, creating additional noise that might disturb everyone else. Others might want to be able to smoke indoors, which, again, could be an issue.
How much should you charge to make money from renting your room?
You can find out how much other homeowners in your area are making on sites like SpareRoom, but don’t assume that you have to charge the same. Think about features that your home has that might make it more desirable, such as proximity to transport links, amenities, or extra bedroom space.
It’s worth remembering that many long-term tenants will expect their hosts to keep not only the shared areas of the home clean and tidy but their living quarters too. When calculating your monthly return, don’t forget to include the cost of cleaning alongside any additional bills.
When we bought our previous house, the owner had rented out her spare room to a lodger. Since the property was close to the University, she had found a lecturer who needed nearby accommodation.
While it was never an option we decided to pursue, it was nice to know it was at least an option should we need the cash. We don’t know exactly how much she was earning from it but we do know it wasn’t a bad amount and helped her cover her bills after she had gone through a divorce.
Taking In Foreign Students
The UK has one of the most celebrated education sectors in the world, attracting hundreds of thousands of students in search of quality teaching every year.
Although many of those students will end up in student accommodation, some will choose to lodge privately with families.
As a homeowner, you can charge a considerable amount of money each week to host a student, anywhere from £80 to £200, depending on the level of service.
Some homeowners with busy lives just rent out a room to international students, letting them get on with their own cleaning and laundry. But many try to differentiate themselves from student digs by doing extra things, such as washing, cooking, and support with the English language.
This probably would have been an option for us in our previous home. After all, if the room was good enough for a lecturer, I’m sure a foreign student would have been happy with it too.
It’s worth considering the location of your home. If it’s anywhere near a University, it will probably appeal to both lecturers and students.
Starting A Home Business
Few employers pay you compensation for the cost of getting to work, but it is a real cost and something that many people are sick of paying.
If you’ve got a spare room, don’t want to rent it out, and would like to avoid commuting, then creating a home office is the ideal solution.
By working in a home office, you can both save money on travel and determine your hours of work. You can also offset some of your office and mortgage expenses against your income, reducing your overall income tax bill.
This was something we did when moving into our current home. In fact, we didn’t just convert one spare room to an office – we converted two!
This means we can both work from home and build up our own separate businesses without getting in each other’s way. Plus, we’ve saved money by not having to commute or rent office space.
The other great thing is we can claim a ‘work from home’ allowance to help reduce our tax bill. Essentially it helps cover some of the increased costs you might incur by working from home such as higher energy bills.
Create A Space For Tourists
People want to have the freedom to travel, and with sites like Airbnb and HomeAway, the cost of tourist accommodation is coming down. No longer are people with wanderlust limited to expensive hotels and holiday lets: they can choose to stay with whomever they want, usually at a much lower price.
The good news for homeowners is that they can capitalise on this trend and make money renting rooms by opening up their homes to tourists.
Although tourists travel to all sorts of locations, people who live in popular destinations, such as London, Brighton, Edinburgh, York, and coastal resorts, stand to make the most money.
If you do decide to advertise your property to tourists on an app, then make sure that you understand your target audience and appeal to them directly. For instance, if you want to rent a property in an area popular with mountain bikers, tell them in your advert that you have bike washing facilities and safe storage for their equipment.