If you're struggling to pay your mortgage or you have lost your job, how about getting a lodger?
The current economic climate means more and more people are taking in paying guests to see them through the credit crunch.
According to room listings website EasyRoommate.com there was a threefold increase in the number of people advertising rooms to let in the property they live in between August and November last year. In the three months to end of August 2008, 2,954 people were advertising for a lodger on the site, but in the three months to the end of November 2008, 8,985 live-in landlords had placed adverts.
So, how do you find the perfect lodger?
First things first
Before you even think about advertising for someone else to come and live at your place, think about whether your property is suitable. Obviously the lodger would need their own bedroom, preferably one that can be described as a "double room". If your spare room currently houses all your junk and clutter then you'll need somewhere else to put it.
You'll also need to think about furniture as it's unlikely your lodger will have their own. At a minimum, you'll need a double bed, wardrobe and chest of drawers. The more privacy you can offer a lodger the better, so an en suite bathroom will make everything much more civilised.
Finding a lodger
Once you've got the room sorted you need to find someone suitable to move in. Word of mouth can often be a good way to find someone. Alternatively try getting everyone on your Facebook friends list to pass it on to their friends that there's a room going.
If that fails contact local institutions that might have people that need somewhere to stay. These include schools, hospitals and large companies.
If you still don't have any joy place an advert on an internet listings site. Going down this route will mean you need to be more selective and vet potential lodgers carefully before they move in. Websites such as easyroommate.com and gumtree.com allow you to post an advert and state what kind of person you are looking for; for example, professional or non-smoker.
If you just fancy having someone to stay during the week mondaytofriday.com advertises rooms available during the working week. At the weekends your lodger will return to their proper home and you'll have the place to yourself.
It should go without saying but always make sure you meet a lodger before agreeing to let them move in. Check they're the sort of person you want to share your home with. As well as credit checking them and finding out about their rental history. This might include finding out about their interests and habits. A party animal who comes in drunk at 3am every night is unlikely to be the perfect flatmate for an early bird.
Moving in
Although not essential, it's a good idea to draw up a contract for your lodger. This should include details of how much rent is due and when and how bills will be divided. It might be easier to keep the bills in your name and include them in the rent, or split everything down the middle when the bills arrive. It's also wise to get a month's rent as a deposit in case your lodger does a moonlit flit or breaks something expensive.
Before anyone signs anything agree some house rules. These should include each person's responsibilities when it comes to cleaning and you might also want to include a clause about how often the lodger can have guests.
Tax
The good news is that the Government's Rent-A-Room scheme means there is no tax to pay on the first £4,250 you earn from having a lodger live in the same household as yourself. This means you can charge up to £354 a month before being taxed on the rental income.
Downsides
The main pitfall to having a lodger is obviously that there is someone else living in your home and the space will no longer be exclusively occupied by you. If you have lived on your own for some time this might come as something of a culture shock so think carefully about whether you can handle queuing to use the cooker or waiting in line to take a shower.
They'll also be insurance issues to consider and it's a good idea to put a call in to your home insurance company to tell them someone else has moved in. In any case they'll be unlikely to cover you if the tenant steals anything as there won't have been any forced entry. Most will still cover you for accidental damage although there might be an extra cost for this.
Some mortgage lenders also like to know if you move anyone into your property but unless the property is totally rented out - and therefore classed as a buy-to-let - it's unlikely there'll be any change to your mortgage arrangements.
Speak to a broker at our mortgage service to see if we can save you money.
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