Make Money Out Of Your Home

Most of us have to pay the mortgage (or the rent). So, why not look at ways to make money out of your home? That extra cash could come in handy.

At this time of year you are probably thinking about holidays. But I'd suggest considering other people's travel plans too, as they could potentially pay for yours. Sounds good, right?

First of all, think about where you live. Is it a popular destination for tourists, or within close travelling distance from major sporting events or festivals? If so, you could be in luck. You could let out rooms as accommodation for holidaymakers or visitors to local events.

And it can pay quite well. The Government's Rent A Room Scheme allows you to earn up to £4,250 per annum, tax free (£2,125 if letting jointly). To qualify, the property must be your only home (or your family home) and the room(s) to let must be furnished. The Scheme is available to homeowners or tenants.

Interested? Having checked it's OK with your mortgage lender or landlord, the next step is to take advice from a lettings agent. They will be able to tell you how much you can realistically charge and will also advise you on your obligations, safety requirements and tweaks to décor that could be helpful.

Before you go ahead, though, it's worth thinking carefully about the impact it can have on your day to day routines. The point I'm making is that it can cause a bit of disruption, if you have to get up early in the morning for work and your tenant's a bit of a night owl.

On the plus side, you will meet lots of new people and be paid for it.

Another way to make money out of other people's vacations is to buy a property specifically for holiday lets. Again, the main consideration is location, location, location. Capital cities like London or Edinburgh can be ideal, given the sheer volume of tourists they attract, e.g to events such as the Edinburgh Festival.

Properties in areas with beautiful beaches and countryside can be lucrative too: brokers are reporting Devon and Cornwall, Scotland and the Lake District as being particularly popular at the moment.

Signs are that it is becoming easier to get a mortgage for a holiday let nowadays and it can generate a reasonable sum of money. Rental value is currently around 8-10% of property value, so you could earn up to £10,000 a year on a property worth £100,000.

There are no guarantees, though and you will need to bear in mind seasonal peaks and troughs, especially if the area is not so popular during the winter. There will also be costs to be factored in, as you'll probably have to engage the services of an agency to handle lettings for you. This could cost between 13-20% of rental income.

For best results, it's worth thinking about your target market in advance, too: if you want to attract families, you'll need to make sure the property is family-friendly and that the area has the kind of amenities they would be looking for.

The great thing about buying a property for holiday lettings is that you can also use it yourself for breaks away and it can also be ideal for you to retire to. What's more, there are attractive tax breaks available for furnished holiday lettings. For example, if you make a loss on the property, you can set this loss against all your other income for tax instead of just your property income.

However, to get the tax breaks, the property must be available to let for 140 days of the year, actually be let for 70 days of the year and can't be occupied by the same person for more than 31 days.

So, whether you have a room to rent or money to invest in a holiday let, it could be well worth looking into, as it could pay for your own holidays for years to come.

More: Holiday For Less!