Can I rent my spare room out? Who should I inform about taking in a lodger? You may be wondering what your obligations are if you are looking to rent a room out. It is important to handle everything above board. Check out the top tips below to reveal the steps that you need to take.
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So, can I rent my spare room?
There is no reason why you should not be able to rent a spare room out in your home. However, it is important to inform the right people. If you currently rent out your property, you will need to inform the landlord of your intentions to rent out a spare room and you should get their permission. If you’re the homeowner, you will need to inform your mortgage provider. A lot of homeowners will extend their home or create a separate dwelling so they can market it as a studio apartment for rent. This is a great way to make money, but you still need to inform the right people.
Aside from this, there are a few organisations that you need to make aware of your intentions to take in a lodger. This includes the Department for Work and Pensions (DWP). If you receive benefits, you need to let the DWP know; otherwise, you will be seen as committing benefit fraud. Aside from this, if you are on low income and receive Housing Benefit, you need to let the council know.
Finally, Council Tax needs to be addressed. If you currently live on your own, you will be receiving a single person discount, which is set at 25 per cent. Once you take in a lodger, you will no longer be eligible for this, so you need to let the council know too.
The rent a room scheme
You can make a decent income by renting out your spare room. However, it’s a good idea to be aware of the Rent a Room scheme before you get started.
The Rent a Room scheme is an optional scheme for anyone that wants to let out a furnished room to a lodger. This can be a tenant or an owner-occupier. This scheme gives participants the ability to earn as much as £7,500 tax-free per annum, or you can make £3,750 tax-free yearly if you are letting jointly. If you earn more than this, you will need to complete a tax return. When you are renting the property, and you want to rent out a room, you will need to ensure your lease gives you permission to do so.
If you want to take advantage of this rent my room scheme, you can opt-in, which you can do on your tax return. I have been advised that when you earn more than £7,500 per tax year, you have two options available to you. The first is to pay tax on the gross income, deducting the tax-free threshold, but you will not have any expenses allowance. The other option is to pay the tax on your actual profit, which is the normal agreement for any rental business. To calculate the profit, you will need to deduct allowable expenses from your income.
Finding a flatmate
Finding a flatmate in your area is only part of the process. After checking they have good references and following a process to ensure they are a safe and reliable flatmate, you then need to make sure you get along with them. Both of you need to make an effort in this regard. Living with someone can be difficult, but if you follow the tips below, you can make it much easier.
One of the best ways to keep harmony in the house is to create a rota. Then make sure you stick to it. This ensures that you both chip in and do your bit. It can be incredibly frustrating if one person is doing all the cleaning and cooking, and the other person does not pull their weight. With a rota in place, you can make sure this does not happen. You also need to respect the belongings of others when you rent a room out.
You may be used to sharing everything at home and more than happy for your flatmate to use your belongings. However, this does not mean that they feel the same way. Some people aren’t used to this type of behaviour, and it is important to respect this.
You also need to make sure you listen to your housemates. Talk to them whenever you feel a problem brewing. This way you can be aware of how they are feeling. You can make a conscious effort to act accordingly. Moreover, if there is a problem and you keep things bottled up, it will only cause resentment. Talk things through instead.
