Rising house prices throughout much of the UK is creating an increased demand for rental accommodation. Renting offers a lucrative money making opportunity for home owners with a spare room.
This Blog helps answer one of the most common questions that we get asked,
"how much can I expect to earn from renting out a room in my home?"
It depends. There are a number of factors that will affect the amount you will be able to earn. By far the biggest factor is location.
The highest rents are in London, with the Borough of Westminster commanding the highest typical rents of around £186 per week.
The lowest rents are in Northern Ireland, with Coleraine (£51 per week) and Newtownards (£52 per week) providing amongst the lowest rents in the country.
A full list, showing the typical room rental prices in the UK's largest towns and cities, plus each of the London Boroughs, can be viewed at www.house-saver.co.uk/renting/
Which locations have the highest rents?
The London Boroughs top the charts. The areas with the highest typical rents comprise:
- Westminster: £186 per week
- Islington: £159 per week
- Kensington and Chelsea: £157 per week
- Hammersmith and Fulham: £153 per week
- Wandsworth: £149 per week
Which locations have the lowest rents?
Northern Ireland dominates the bottom of the charts, with Huddersfield being the only location outside of Northern Ireland in the bottom 5. The areas with the lowest typical rents comprise:
- Coleraine: £51 per week
- Newtownards: £52 per week
- Huddersfield: £53 per week
- Ballymena: £53 per week
- Castlereagh: £54 per week
I live in a nice area, will that make a difference?
Central locations and well-to-do areas in a town or city will command higher rents than less salubrious areas.
There can be a large difference in rents between areas in some of the UK's towns and cities. For example a smart room in a prime area of St Albans will command a typical weekly rent of £145 per week, whereas rooms in less attractive areas of St Albans will fetch around £92 a week.
Which other factors will determine how much I can earn?
The size of the room is also a major factor. Double rooms will command a higher rent than a single.
You can charge a premium if a room has an en suite bathroom or if you are willing to let a couple stay, or take in a pet.
Providing off street parking will also enable you to charge a higher rent.
Letting out your room on weekdays only, whilst enabling you to get your house back to yourself at weekends, will reduce your earnings.
Will I have to pay tax on my earnings?
Under the Government’s Rent a Room scheme, you can earn up to £4,250 through renting a room before paying tax. The government will increase the level of Rent-a-Room relief from £4,250 to £7,500 from April
2016. For more information on the tax implications of renting out a room, visit www.gov.uk/rent-room-in-your-home.
Taking in a lodger is a tried and tested way of generating a significant income from your home. Whilst rental earnings vary significantly from town to town, if you have a spare bedroom in your home you are unlikely to find a more lucrative way of bringing the room into use.