Renting out a room to a perfect – sometimes imperfect – stranger is some folk’s idea of hell. To others it’s a heavenly way to boost income, halve house bills and even help pay off the mortgage sooner.
If you’re a homeowner who has the space but is still weighing up the pros and cons of living up close and personal with someone new, here are some handy hints to help you decide.
The UK Government offers a Rent-a-Room scheme that offers benefits when it comes sharing furnished accommodation in your house or flat with a new housemate.
The pros? You can rent out a spare room for up to £7500 a year tax-free – that’s £7500 to spend on everything from a new kitchen to a luxury holiday in the Bahamas.
The cons? The paperwork.
The tax exemption is automatic if you earn less than the £7500 threshold. You must complete a tax return if you earn more than this.
You can then opt into the scheme and claim your tax-free allowance.
If you choose not to opt in, you can instead record your income and expenses on the property pages of your tax return.
Both homeowners and tenants (where the mortgage conditions or tenant’s lease allow) can use the scheme.
Remember, too, you don’t have to take on a full-time or 7-days-a-week lodger. For example, you may have a city worker staying Monday to Thursday, who travels home to their house in the country at weekends.
Once you’ve decided the best route for you, it’s all about getting the right person. Renting out a room can have a dramatic impact on your day-to-day life.
So setting out the ground rules in writing at the start allows you both to establish the do’s and don’ts – such as whether they can have free use of the living room or have visitors at all hours or only within specific times.
Be sure, too, to get work and personal references and ask wannabe lodgers the all-important questions.
Do they listen to Mama Mia on repeat? Do they keep pet spiders? Do they work nightshifts – this is great for giving you space in the evenings, not so great for being woken up by a key in the front door at 5am.
Finally, don’t forget to check with your home and contents insurer, if you want to go ahead.
Making everything above board – as part of what’s known as common law tenancy – will give you peace of mind now and prevent the possibility of any hiccups later.
Oh, and unless you want to find the last slice of cheesecake gone, invest in ‘mine’ and ‘yours’ Post-It notes for the fridge!