Lodgers help pay off mortgage

August 15, 2009 by Brendan O'Neill

Advice & Tips

It seems that renting a room out to a lodger has become much more popular this year as figures show around 500,000 extra rooms have been let out as borrowers look to make it easier to pay their mortgages.

The Government allows a household to rent out a room and earn thousands of pounds per year tax free up to £4,250 per year, or £354 per month, a figure that is updated in the CeMAP syllabus each year.

Figures released recently show that in July last year there were 388,000 lodgers in Britain and this year the figure has risen to 981,000.

It seems this figure is not evenly spread across the UK however, as homes in London were most likely to take a lodger as 6 per cent rent out a room. Only 1 per cent in Northern Ireland or Scotland rent a room out.

Nici Audhlam-Gardiner, director of Alliance & Leicester Mortgages, said: “If you have a spare room that’s gathering dust, its worth considering a lodger and earning £4,716 a year. Not only will you have some extra money each month but most of it could be tax-free too.”

Matt Hutchinson, director of Spareroom.co.uk an online service to match lodgers with potential landlords, said: “We have seen unprecedented levels of people looking for lodgers over the past 12 months and it’s no coincidence that we’ve seen these record numbers at the same time the housing market has slumped and the economy has faltered.”