How To Turn Your Spare Bedroom Into Extra Cash

In the UK, demand for rental accommodation tends to be consistently strong. If you have a spare room, you might want to tap into this demand. What’s more, you can earn up to £7500 a year tax-free under the government’s rent-a-room scheme. If this sounds good, here’s a simple guide on how to turn your spare bedroom into extra cash.

Decide what you want from a tenant

Probably the first question you need to answer is what sort of lease you’re willing to offer. To do this, think about these key questions.

Do you want a full-time tenant or somebody who’s only there on weekdays?

Do you want a long-term tenant or a short-term tenant?

Do you want to let the room to a single person or a couple or are you open to either?

Then think about your lifestyle and what that means for house rules. In particular, you will need to set a position on the following:

Smoking/vaping

Pets

Noise levels

Working from home

Visitors particularly overnight visitors and/or children

Lastly, think about how much you’re going to need to get on with your tenant personally. In other words, how much interaction are you going to have with them? If your paths are likely to cross fairly often, what sort of person will you be compatible with?

Be clear on what you can offer

The laws of supply and demand apply both ways. In other words, the more you can offer, the more interest you’re likely to get. The more interest you get, the more scope you have to charge a relatively high level of rent and/or be selective about your tenants.

Prospective tenants need to know what they can expect:

In the local area

In the house and room

From you personally

Think about points such as:

The local amenities

Transport/parking

Overall accessibility (especially for people with mobility issues)

The facilities in the house (especially the internet and the number of bathrooms)

The size and condition of the room itself (and whether it has its own bathroom).

For completeness, if you want to participate in the rent-a-room scheme, the room will need to be furnished.

Think about any aspects of your lifestyle that a prospective tenant might want to know about. In particular, do any of the following apply to you?

Smoke/vape

Have children

Have pets

Have a lot of visitors

WFH/keep odd hours

Prospective tenants will also need to know what terms you want to set. In particular, you will need to cover the following points.

The rent and payment frequency (e.g. weekly/monthly)

The deposit

The contract length and any break period

The arrangement for bills/CT

For completeness, if you are using the rent-a-room scheme, the £7500 cap is for rent only. It is permissible to charge council tax and bills separately.

Create a listing that's honest but sells

A listing should highlight everything you can offer. At the same time, be careful to avoid creating a misleading impression of what the tenant can expect. All that will happen is that you get interest from people who will end up disappointed.

Select your tenant

When you are letting out a room in your home, there are generally two parts to tenant selection. Firstly, you find somebody you believe you can get on with (insofar as that’s necessary).

Secondly, you undertake practical checks. For example, you may want to take references and/or do a credit check. If you are feeling particularly cautious, you may want to do a criminal records check.

Keep in mind that a prospective tenant may want to undertake due diligence on you. You will need to decide for yourself how much information you are prepared to disclose.

Set up a lease

It’s easy enough to find lease templates to buy or even download for free. It can, however, be worthwhile paying a lawyer to draw one up for you.

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