Did you know your spare bedroom could earn you £7,500 per year tax-free?

With the government's Rent a Room Scheme, that could happen.

But maybe you already know about this and just want to find out how to rent out a room in Birmingham, London, Liverpool, Bristol, or anywhere else in the UK.

We compiled a comprehensive list of everything you need to know to rent your spare room successfully.

From understanding the Rent A Room scheme to selecting the perfect tenant, we've got everything covered. You'll walk away with actionable insights on transforming your spare room into a profitable venture.

Join us as we explore how your spare room can get to work for you.

 

Can I Rent Out A Room In My House?

 

The journey to renting out a room in your home starts with understanding the government's Rent A Room Scheme. This government initiative is available to owner-occupiers and tenants, allowing you to let furnished accommodation in your primary residence. Impressively, the scheme offers a tax-free income of up to £7,500 per annum, or £3,750 for joint lettings, making it an attractive option for homeowners and renters alike. It's essential, however, to ensure your lease permits subletting if you're renting.

 

Should You Opt In or Out of The Rent-A-Room Scheme?

 

Participating in the Rent A Room scheme can significantly augment your income, especially if you receive the Universal Credit, as earnings up to the £7,500 threshold aren't considered in your income assessment. However, it's crucial to consider the implications of Council Tax Reduction and Housing Benefit, as these can be affected by your decision to rent out a room.

Council Tax Reduction and The Rent A Room Scheme

If you previously qualified for the 25% single person Council Tax Reduction and would like to rent a room, you'll no longer qualify for the discount.

Housing Benefit and the Rent A Room Scheme

If you are a working-age social housing tenant, how the Rent A Room scheme affects your Housing Benefit depends on how the person renting the room is classified.

You can learn more about both the council tax reduction and the housing benefit options and their interaction with the rent-a-room scheme by following the links above to the UK government website.

 

How to Rent Out A Room in Your House

 

Ready to rent a room? The following is everything you need to know to rent your room.

 

Check with Your Mortgage Company to See if You Can Rent Out A Room

 

Check With Your Mortgage Company: Before you put an ad out for your room, it's essential to check with your mortgage company to ensure renting out a room won't breach the terms of service in your agreement. Get approval from your lender before you rent out a room in the UK by obtaining consent for lease from your lender. That should give you the approval you need moving forward.

 

Verify with Insurance

 

Once you obtain consent from your lender, the next step is to verify with your insurance provider that they approve of your renting a room. Keep in line with your insurance policy to avoid any painful legal hiccups.

 

Prepare Your Room

 

These are the basic items to remember as you prepare to rent out a room in your home.

• Ensure the room and the common areas are ready for clean, safe, and in good repair.
• Consider any appliances or furniture required.
• Complete any repairs before your tenant moves in.

 

Understand Your Legal Obligations

 

Next, you'll want to familiarize yourself with the required safety obligations and regulations of renting out a room. For example, you'll need to obtain the Energy Performance Certificate (EPC) and conduct a Right to Rent Check to ensure your tenant has the legal right to rent in the UK.

 

Decide on the Rent & Other Details

 

As you start to move towards your end goal of finally renting your room in Birmingham or beyond, you need to research local rent prices to set a competitive rate for your room. You'll also want to decide whether utilities will be included in your price. This could affect the price point and type of contract you're setting out for your tenants.

Another area to consider as you set your price is house rules. Some examples of house rules can include:

• No smoking inside the house
• Pet policy and regulations
• Noise regulations and quiet hours
• Maintenance and repairs
• Safety and security measures
• Proper waste and disposal and recycling
• Parking and vehicle regulations

This is just the foundation for your house rule checklist. You can add, change, or adjust the list according to your needs.

Advertise the Room

 

Now that you have everything set up, it's time to advertise your room. There are multiple ways to do this, including:

• Online Platforms (like ours)
• Local Newspapers
• Community Boards

When you post your ad for the room you're renting, be clear about what's included, the price point, and any preferences for the type of tenant you're looking for (e.g., student, professional, etc.)

 

Choose A Tenant

 

Once you have a few potential tenants lined up, the next step is to interview them to ensure they're a good fit.

Some questions you can use to ensure you choose the right tenant include:

• What's your current employment situation?
• How long do you plan to rent a room from me?
• Do you smoke or have any pets?
• How do you plan to handle shared responsibilities around the shared common areas?
• Do you have any concerns about the rental agreement or house rules?

Also, be sure to double-check any references to ensure that potential tenants are easy to live with.

 

Create a Tenancy Agreement

 

A clearly defined and written tenancy agreement should detail rent, deposit, notice period, and any other conditions you want to ensure are included. You can also use a lodger agreement template or seek legal advice as you draft one.

Protect The Deposit

 

Once you have secured a tenant and a deposit for your agreement, you may protect it using a government-approved scheme, although it is not a legal requirement for lodgers. Tenancy deposit protection is a tool the government offers landlords, so consider using it if you'd like an added layer of protection for the deposit.

 

Maintain Good Communication

 

Keep open communication lines between yourself and your tenant to promptly and clearly address any issues. It's also a good idea to check that the property remains in good condition and that your tenant is happy.

 

How Long Should You Rent Out A Room For?

 

You can let your room out for as long as you'd like, from a fixed term of six months or renting it out from one month to the next. However, it's important to remember that the rent a room scheme maxes out at £7,500 per year tax-free. After that, you'll be subject to taxes on the income.

 

How Do You End A Letting?

 

Once you're ready to end a letting with your tenant, there are a few ways to do so. This can include providing reasonable notice for excluded occupiers needing a formal notice of quit for others. It's crucial to follow legal protocols to avoid complications.

What If Your Property Changes Ownership?

 

If your property changes ownership, say you sell the home or stop living in it, there are various regulations to consider.

If you sell your home and the new owner plans to live in the property as a resident landlord, you must:

• Give notice to a tenant within 28 days that they intend to live there
• Move in within six months of the sale

Until the new owner moves in, your tenants will have more protection through tenancy laws because there's no resident landlord. You can learn more about tenants' rights here.

For more information about ending a letting, check out what the government has to say.

 

Unlock The Door to Successful Room Renting: Make Your Space Work For You

 

Renting out a room in Birmingham and the UK under the Rent A Room Scheme offers a unique opportunity to earn tax-free income, enhance financial security, and make the most of unused space.

This comprehensive guide has walked you through the essentials—from determining eligibility and preparing your room to understanding legal obligations and selecting the right tenant. By following these steps, you can confidently navigate the renting process's complexities.

If you are ready to rent a room but need to find tenants, we can help! Check out our platform to get started earning income from your spare room.