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taking in a lodger

Could You Clear Some Space For A Lodger?

Since the changes to the tax threshold for having a lodger changed earlier this year, spare rooms have become potential gold mines for anyone willing to take in a lodger. Here we look at utilising that spare room for some extra cash each month.

Your spare room no-doubt has the potential to be anything you want it to be. A new office, a spare room for when friends and family come to stay, your own private gym, a music room, even your very own yoga studio. But what if your spare room could offer you more than additional space for activities you rarely use it for? What if your spare room could offer you the ability to make some extra cash? Would you be willing to part with that extra space if the price was right?

As the government eased up on the amount you are allowed to receive, tax free, in return for housing a lodger in April this year, spare rooms right across the country became potential gold mines for their owners, especially in sought after and expensive rental areas in our major cities. You are now allowed to earn up to £7,500 tax free per year from anyone lodging in your home.

There are currently millions of homes with spare rooms in the UK (many with more than one spare room as adult children have left home but the parents remain in a large family home), so millions of people just like you have the opportunity to make some extra money for relatively little effort. Many lodgers these days are professional people working away from home during the week so if you are lucky they will only be there mid-week and the place will still be all yours at the week-end.

What would put you off taking in a lodger?

lodgers roomClearly it is a bit of an effort clearing out the spare room. Most people chuck clutter into their spare room without a thought, and the job of clearing it gets bigger and bigger and bigger as time goes by. Have you ever opened the door to your spare room planning on sorting it, and decided you will do it another day because it is just such a mammoth task? The answer is probably yes, and you have probably done that several times too over the past year. A spare room in the UK tends to be a spare room for guests that maybe come once every year, or never. A casual storage room with a cross-trainer you never use, a keyboard for that band you never started, and a rack of clothes you’ll never wear, or a complete clutter room full of broken things you plan to fix one day. It could house presents you never really wanted, and impulse buys that were immediately regretted and pushed to one side. When space is at such a premium in so many parts of the country, and when you paid thousands extra for that extra room when you bought your property, isn’t it a shame that it isn’t really valued or utilised at all? In some areas an additional bedroom can add £100,000 to the purchase price and in really upmarket areas it can add much more.

Taking in a lodger

If you want to earn £7,500 tax free by taking in a lodger there are some rules you must follow. Your home has to be your main home and you have to won it (or, at least, have a mortgage on it), you have to live there a certain amount of time because if you’re simply renting your home out you’re under the buy to let rules which are different and have different tax implications. If you do look into the details and decide that housing a lodger is for you, then your very first step is going to be decluttering that room – and this time you will have no excuses. It is much less of a laborious task when you consider the financial reward you will have at the end of it – that might just be the impetus you need. Here are some tips to help you declutter that spare room in preparation for your new money-making scheme of taking in a lodger:

  • Put the time aside – there’s no point in doing it little by little if you know that you will keep putting it off. Put aside an afternoon, evening or weekend (if you need it) and commit to spending that time clearing the room out.
  • Set everything up ready to do the job – get cleaning products, get bin bags, boxes, set up self storage, clear space in the garage – whatever it takes to get the job done
  • Be ready to make some tough choices – you will need to be honest and accept that hoover is never going to get fixed, that keyboard is never going to get played, and that ugly dolphin statue is never ever going to get displayed – be tough so you can get rid of more
  • Have places for everything to go – everything you get rid of will need a new home, whether that is self storage, the bin, or charity shops – ensure you have an idea of the different places items will be going to so you can package them accordingly
  • Make some money while you are at it – why not carboot or sell online any items of worth? This could make you the cash you need to spruce the room up ready for its new tenant

 

Remember that you will need to do extensive research before setting up a lodger in your home. Look into the legalities, insurance, financial rules and also the impact it will have on your home-life before going ahead. If it doesn’t work for you, perhaps you could still commit to clearing out that room so at the very least you have additional space to utilise.

 

 

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