How much profit can you make from your spare room?
It appears that 2011 may well be the year of the “live-in landlord”. Figures supplied by a leading online letting agent suggest that the current austerity measures and the effect of them on job cuts is leading more and more people to look for a room rather than a house.
2010 a vintage year
spareroom.co.uk a website designed for those looking for flats or house shares say that 2010 proved to be a bumper year for live-in landlords with over 200,000 putting a room up for rent. They say that advertisements for the letting of rooms went up by 44% on the previous year and the amount of people renting out a room increased by over 150%. They expect this to be surpassed in 2011.
Several factors combining
Not surprisingly perhaps the South East and London saw the biggest growth in people willing to rent out a room. The influx of people looking for cheap accommodation as they start out a career in the Capital, as always, fuelled the lower end of the letting sector and many experts believe the London Olympics in 2012 is already adding to the promised boom of 2011. Of course the present situation with the housing market not moving at all is forcing many to look for cheap renting solutions as they wait for their home to sell.
Look before you leap
A Director at Spareroom.co.uk said that over the last year and half the number of cash strapped homeowners looking for a way to pay their household bills by renting out a room had soared. He went on to say that homeowners thinking of this option should make sure they have completely researched what they are undertaking before they actually take in a lodger.
Informing your mortgage company is absolutely essential, as is getting the correct insurance. A live–in landlord is not looking for a conventional landlord insurance policy, he needs to talk to his property insurance broker to ensure he is buying a policy that gives him the cover he requires, the most appropriate type of policy in this situation may be HMO insurance.
He should also take stock of the practicalities of having a stranger in their own home. Does the home need restructuring to accommodate themselves and the lodger, does it comply with the legislation surrounding the taking in of paying guests. Last but certainly not least he must have a legal tenancy agreement drawn up and signed before he undertakes his new role.