Rent-a-Room Brings in 3.3 Billion for UK Homeowners

An estimated 1.7 million (9%) UK homeowners now have a lodger in their home, up from 6% in 2011, according to research from Santander Mortgages.

The “rent-a-room” trend provides UK homeowners with more than £3.3billion per year in rental payments – an average of £164 per month for each recipient.

Nearly three quarters (74%) of homeowners have at least one spare room in their home that currently is either rented out or has no-one living in it, while 26% have no unoccupied rooms in their house.

The research shows that there is currently a potential £38.9billion of rental income to be made in the UK from renting out spare rooms. However, nearly nine out of 10 UK homeowners (87%) with a spare room still choose not to rent it out.

More than a third (35%) of those who rent out a spare room do so to help out a friend or family member. A further 11% do so because they need the additional income to meet their mortgage payments and outgoings while 15% need the money to supplement their disposable income.

Some 20% of those in the North West with a spare room and 19% of those in London with a spare room rent out a spare room. Meanwhile Britons living in the East of England (7%) are less enthusiastic about taking in a lodger.

Of the one in three (34%) homeowners with unoccupied rooms who would consider renting out their spare room, 18% would do so if they needed to financially and 23%would rent out the room if a friend or family member needed it. Some 11% would consider it if they could find an appropriate tenant and 6% would do so if they were able to make decent money from it.

The research further reveals that of those currently renting out a room, 13% believe that the rental income would cover more than 50% of their total mortgage payments each month. On average, respondents said that 27% of their mortgage payments are covered by spare room rental income per month.

Phil Cliff, Director of Santander Mortgages, said: “The ‘rent-a-room’ trend is clearly on the rise as the squeeze on the cost of living drives homeowners to look for ways to supplement their disposable income and cover their mortgage costs.

“There is clearly still plenty of scope for this market to expand, as homeowners with unoccupied rooms put their property to work by renting rooms to friends, family or tenants. It is also worth bearing in mind that the UK Government’s ‘Rent a Room’ scheme enables homeowners to earn up to £4250 per annum tax free from renting out a spare room.”

Cliff said: “We advise that before taking this step, anyone with a mortgage should speak to their mortgage lender to ensure they stay within the terms and conditions of their mortgage agreement.”

A quarter (24%) of homeowners have one room spare, 23% have two rooms spare, while 19% have three rooms spare in their house. Only 8% have four or more unoccupied rooms in their home.