Study Suggests Benefit Cuts Will Bring Shortage Of Affordable Housing...BATH, ENGLAND - JANUARY 02: Housing stock is seen on January 2, 2012 in Bath, England. A study by the Chartered Institute of Housing has claimed housing benefit cuts and caps being introduced this month will put 800,000 homes out of reach of people in receipt of welfare payments and could lead to families having to choose cutting food bills to pay rent or moving out. It also warns that the cap of a maximum 250GBP a week on a two-bedroom home could lead to 'benefit ghettoes' and force poorer families into migrating into housing uk property house homecheaper areas. (Photo by Matt Cardy/Getty Images)
© Getty

Is your spare room collecting little more than dust? It could be earning its keep if you rent it out to earn some extra cash.

The start of the new tax year this week means the amount of money you can earn tax-free from letting to a lodger will increase from £4,250 to £7,500, as signalled in the 2015 summer Budget.

Taking advantage of increased Rent a Room relief is likely to benefit both you and your tenant given the increasing number of young people looking for low-cost lodgings in London. Although a number of companies pay their interns’ expenses, many millennials struggle to afford rising rental costs in the capital.

Advertise your room online on Gumtree, SpareRoom or EasyRoommate, and browse websites to compare prices of similar room rentals in your area. Double bedrooms in north London family homes are regularly available for about £550 per month.

Don’t want to commit to a longstanding lodger? Sign up to Room for Tea. This network connects interns in need of affordable and short-term accommodation in London with hosts willing to let out a room. Furthermore, all guests are verified through reference checks.

Some might be apprehensive at the thought of sharing their house with a stranger, but the ball is firmly in the homeowner’s court. Always meet potential lodgers, advertise specifically to young professionals and lay out the house rules (no overnight guests or exotic pets) beforehand.

Get alerts on Personal Finance when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article