Looking for a way to bring in a bit of extra income? The four walls around you could provide the answer.
Your home could potentially provide you with a valuable cash boost and, thanks to certain tax allowances, you might not even have to pay tax on the money you make from it.
Here, we look at five ways your property could work for you.
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1. Take in a lodger or rent out a room on a short-term basis
If you’ve got a spare room sitting empty, you might want to consider letting it out to bring in some extra cash. Most live-in landlords let their rooms fully furnished, so you won’t have to worry about clearing out all your things – although your lodger will expect any chests of drawers or wardrobes to be empty.
Your only legal obligation regarding furnishings is that they comply with fire safety regulations, so you’ll need to check any labels on the bed and any soft furnishings, for example, before advertising your room.
You can either advertise your spare room online, for example through sites such as Spareroom.co.uk or Roomgo.co.uk, or you could place an ad in your local paper. You can list your room for free on both these sites, or you can pay a fee to upgrade your advert so that it will appear higher up the results list when people search for accommodation. Bold ads posted by upgraded users receive on average double the enquiries, according to SpareRoom, which charges from £12.99 for an upgrade for seven days.
If you don’t fancy the long term commitment of a full-time lodger, you can advertise your room on sites where people are looking for somewhere to stay for the odd night, or who want mid-week accommodation only, such as MondaytoFriday.com, Fivenights.com or Airbnb.co.uk. It’s free to list your room on Airbnb, but when you receive a booking you will be charged a service fee, typically 3% of the amount you’re charging.
Important stuff to know
If you’ve got a mortgage on your home, you’ll need to let your mortgage lender know if you’re planning on letting out a room. You should also tell your home insurer too, as this might affect your policy, or you may need to take out additional cover.
If you’re getting any means-tested benefits such as income support or pension credit, any income you get from renting out your room might affect these benefits. You can find out more about this on the Citizens Advice website.
Make sure you set some ground rules with your lodger before they move in, so you both know what to expect. For example, if you don’t want any noise after midnight, or for them to bring friends back to your home, you should make this clear from the outset. Write an inventory of all the items that are in the room and their current condition too, just so there’s no arguments if anything gets damaged or broken whilst they’re there.
What about tax?
Under the government’s Rent a Room scheme, you can earn up to £7,500 tax-free each year from renting out one or more furnished rooms in your home. If you earn less than this from letting out a room, you don’t need to do anything.
If your earnings from letting out a room or rooms are higher than this £7,500 threshold, then you’ll have to fill out a tax return. You can contact HM Revenue and Customs (HMRC) to request a tax return form here.
If you live alone and take in a lodger, bear in mind that this might affect your Council Tax, as you’ll no longer benefit from the single person’s Council Tax discount of 25%. However, you may still be eligible for this discount if your lodger is in full-time education or is already paying Council Tax elsewhere (they might do this if they’re only staying in your property on weekdays, for example), or if they’re receiving certain benefits. If in doubt check with your local authority. You can find contact details for your local council here. You can find out more about letting out a room in your house in our guide Renting out a room – What you need to know.
2. Turn your property into a film star
Ever thought about hiring out your home so it can be used in a film or TV series?
You don’t have to live in a ‘Grand Designs’ property for it to appeal as a shoot location. Often film and TV producers are looking for normal family homes and fees can be generous, especially if your property will be needed for a while.
You’ll need to sign up with a location agency who’ll decide whether your home is suitable. Usually you’ll be asked to submit photographs and supply information about the property, for example, whether it’s detached, if there’s parking available and so on.
Location agencies where you can register your property include Shootfactory.co.uk and Locationworks.com.
Whilst there’s usually no charge to register your property with a location agency, they will usually take commission from any fee agreed with the film or TV company, which is typically 20% or 25%. So, for example, if you’re being paid £1,000 for your home to appear, the location agency may take £200 or £250 of this.
Important stuff to know
Even if a location agency wants your property on its books, there are no guarantees a film or TV production company will want to use it, so you can’t rely on this as a stable or reliable income stream.
If your property is used, the production company may want to make changes to it, such as redecorating, or bringing in their own furniture. They’ll also usually expect you to be out during filming, or at least in a room away from where it is taking place which may be disruptive, especially if you work from home.
Crews will often have a lot of equipment too, so you’ll need to be prepared for the upheaval of them lugging this in and out all the time, and them taking up any parking spaces you have.
You’ll need to make sure your buildings and contents insurance is up to date before filming commences, and it’s a good idea to let your insurer know that you plan to use your home as a TV or film location. If there is any damage during filming, this should be covered by the production company which will have public liability insurance as standard.
What about tax?
You don’t need to pay tax on the first £1,000 you earn from renting out property as a film or TV location each year, known as the Property Allowance.
If income from your property is between £1,000 and £2,500 you’ll have to declare to HMRC, and if it’s more than £2,500 you’ll need to register for self-assessment and declare your income on a tax return. You can find out more about how the Property Allowance works here.
3. Hire out your home as office space
If you’re lucky enough to have lots of spare space in your property, why not consider letting it to a small local business or freelancer to use as office space? This might appeal if you want to bring in some extra cash but don’t like the thought of people staying overnight in your home.
However, you’ll usually need to apply for planning permission for a B1 licence for the part of your property you wish to let out as office space, and you’ll also need to arrange public liability insurance in case someone working in your property has an accident whilst they’re there.
You can advertise your space on sites such as Hubblehq.com, Officeriders.com, Gumtree.com, or Nextdoor.co.uk, or you could put up a notice in your local newsagent.
If you let out an office space via Hubble HQ, you’ll be charged 10% of the fee you’re getting for the length of time the space is let out. Officeriders, run by French founders, applies a service charge of 10% on confirmed bookings, excluding tax. When we checked, all the UK office spaces advertised on Hubble HQ and Officeriders were in London, as demand for meeting spaces is usually greatest there.
Ads on Gumtree are usually free to post, but if you want your ad to have a more prominent position you may need to pay a fee.
Important stuff to know
Before you apply for permission for a licence to rent out part of your property as office space, you must let your mortgage lender and your home insurer know your plans. You could face steeper insurance premiums, but it’s important to let them know so that you have peace of mind you’ll be covered for any losses.
You’ll also need a contract for anyone letting out your home. Sites which allow you to list your office space usually offer template contracts which you can edit.
Office workers expect peace and quiet, as well as access to good wifi, and a place where they can make tea or coffee. If you’ve got small children running around or have animals that make lots of noise, this might not be the best way to make an income from your home.
You’ll need to consider parking and transport too. You might have enough room for a couple of people to work in your home, for example, but if you’re a long way from public transport, can your driveway accommodate two extra vehicles?
What about tax?
There’s no rent a room relief available if you’re letting part of your home as office space, so you’ll have to pay income tax on the income you generate. However, you may be eligible for the Property Allowance.
4. Rent out your driveway or garage for parking
Parking is often in hot demand in cities and towns, so if you don’t use your driveway or garage, you might want to consider letting it out.
Spaces near a train or bus station are often particularly in demand and could make you as much as £200 a month. Park Let has a useful Parking Price Guide Tool which can give you an estimate of roughly how much your parking space or garage could be worth.
There are several websites where you can list your parking space or garage free of charge, but these sites will usually charge commission on anything you earn, or an annual fee. Sites include Parkonmydrive.com, Yourparkingspace.co.uk, JustPark.com and Parklet.co.uk. Parklet.co.uk, for example, charges between 20-30% commission on any bookings, whereas Parkonmydrive.com charges a £20 annual fee. With Yourparkingspace.co.uk, a 20% uplift is added to your price which the driver has to pay, so there’s nothing extra for you as the space owner to pay.
Important stuff to know
You can only let out a parking space or garage that you own, so if you have a resident’s parking permit from your local council, you can’t sell this on to someone else.
You’ll need to have a contract in place which makes it clear that you aren’t liable for anything that happens to anyone’s car while it’s parked in your space. Most of the car space rental websites will provide a template of one of these for you to use.
If you think you’re going to need your space at a particular time, perhaps because you’ve got friends or family coming to stay, make sure you add restrictions to your advertisement showing when it will be unavailable.
If you share a driveway with any of your neighbours, you’ll need to check with them first whether they’re happy for you to let out your space.
What about tax?
Thanks to the Property Allowance, if you make less than £1,000 from renting out your parking space or garage, you won’t have to pay income tax on this cash. However, you will have to let HMRC know about any income that’s above this amount, as this will be taxable.
5. Rent out spare storage space
If you’ve got an outbuilding or garage that’s sitting empty, you might want to think about renting it out as storage space.
Websites where you can advertise storage space include Stashbee. Listing a space with Stashbee is free, and it charges a 5% service fee which is included in the rental charge paid by the person hiring the storage space.
The site requires you to upload photos of your space as well as its dimensions.
Important stuff to know
Any outbuilding or part of your property that you rent out as storage space must be dry, clean, secure and free from any rodents that might nibble their way into boxes.
Make sure you know exactly how long the space will be needed for, and that the person renting it has insured all the items that they’re leaving with you. Usually if you let your space via a site which matches hosts with those looking for storage, they can arrange insurance on their behalf. For example, if you sign up to be a host with Stashbee and someone rents out your space via the site, they can opt to take out ‘Item Guarantee’ cover which means their things will be covered up to £1,000. Sites where you can advertise your storage space also usually provide storage agreements which you can download, providing a legal framework for all bookings made.
You should also let your mortgage lender and home insurer know about your plans to let part of your property as storage space – they can let you know if they’re happy for you to do this, and if you need to arrange any additional insurance cover.
What about tax?
If you let out storage space in your home, you should be eligible for the Property Allowance, so you won’t have to pay tax on the first £1,000 of income you receive. You must notify the taxman if income from your property is more than this.
If you’re looking for other ways to supplement your income, take a look at our guide: 24 ways to make extra money and boost your income.
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