According to a report by the Santander Bank, one in eight people with a spare room in the UK are now renting it out. With the demand for rental properties so high, the flat-share/spare-room market is thriving. Here’s what you need to know to make a success of it…

1. A tenant living in your home is a lodger. Lodgers are subject to fewer legal requirements than other tenants, however the arrangement should be written down in the form of a lodger’s agreement.

2. Know what type of tenant you want. Remember: this is a room in your home that you are advertising for – you want to make sure the tenant is the right fit. When you take on a lodger, they will be living with you on a daily basis, to forming a good relationship is key to a successful tenancy.

3. Be clear with your lodger with things like house-rules, i.e. if you go to bed at 10pm, you don’t want music blasting out of your lodger’s room at midnight.

4. To find a lodger, you need to know where they are looking – with the majority of tenants looking online, you need to get your room on the big lettings sites (Rightmove, Zoopla, FindaProperty, Gumtree) through Upad, and the dedicated spare room channels (SpareRoom and Easyroommate).

5. Make sure you have decent photos, and especially a great lead photo of the room. Better photos improve the number of tenant enquiries and will help you let your room faster.

6. When drawing up the tenancy agreement, make sure you make it clear who is responsible for bills. This is important for all types of room-share tenants. Remember, in a HMO, a separate TV license is needed for each room.

7. Check with your insurance company, your mortgage lender and your freeholder (if you live in a flat) that you are allowed to rent out room(s) in either your home or another property you own.

8. As with an assured shorthold tenancy agreement, make sure you have all the legal documentation in place, such as an Energy Performance Certificate and a Gas Safety Certificate.

9. If you are renting out a furnished room in your home, there is a tax threshold on rental income. You will have to declare your earnings on your tax return, if the rental income from your lodger exceeds £4,250 a year. See here for more details (http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804)

10. Make sure you reference your tenants before they move in. It achieves two main things: makes sure the tenants are genuinely interested in the property and that the tenants believe they can afford the rent (and won’t fail the referencing checks).

Related posts:

  1. Renting out rooms ‘becoming more popular’
  2. Londoners ‘most likely to take in lodgers’
  3. Renting Property Without An Agent
  4. Property tax for rent a room scheme ‘is outdated’
  5. Income from property: put your home to work

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