A trend towards renting by the room has been growing steadily in recent years. Young professionals are finding it tough to get a mortgage, and are renting for longer.
At the same time, homegrown students struggle to afford luxury accommodation that is built in university towns to attract wealthy foreign students. Furthermore, welfare reform is now pushing the under 35s who are in receipt of housing benefit into shared accommodation in the private rental sector.
All of these factors are combining to create unprecedented demand for rooms to rent.
Renting by the room is a great way to improve your rental income, but requires a more hands-on approach compared with standard family lets.
SpareRoom are experts in renting and sharing, and have prepared this checklist to help you understand the ins and outs of renting a property by the room.
1. Check if sharing is in demand in your area
Assess demand, room rents for your local area and see what kind of budgets room seekers to match your requirements, by checking listings on SpareRoom (both rooms offered and rooms wanted) and the handy monthly Rental Index.
2. Find out how profitable it might be
Work out how much you’re likely to get for your property if you rent on a room by room basis. Not all rooms need to be equal size, but it helps if they can fit a double bed as you’ll get less rent for a single.
3. Include bills or not?
Generally room seekers tend to want to see rents all inclusive so that they can budget effectively, but you’ll need to assess energy usage and costs.
4. Will renting the property by the room turn it into a HMO?
Check out this handy HMO guide to find out what the implications will be if your property is classified as a House in Multiple Occupation.
5. Make sure you comply with all relevant legislation
Comply with any extra safety requirements if it is a HMO – you may need fire doors and sprinkler systems. You’ll need a gas safety check for the property, whether you’re renting by the room or not.
6. Find the most suitable tenants for your property
Consider suitable target markets for your property – students, professionals or low earners and those in receipt of benefits. There are pros and cons to all of them, ensure you choose what’s right for you.
7. Get the advertising right
Advertise your rooms using the right websites and channels to make sure you attract the types of tenants you want.
8. Tenant referencing is an investment
Screen your tenants prior to the start of the tenancy using a reliable tenant referencing insurance to ensure they have good a good credit score and are able to pay the rent. After all, it's better to know about any potential financial complications before it becomes a larger issue.
If you have rent guarantee insurance in place, it's also worth checking your policy documents to find out what your referencing requirements are. If the tenant defaults on the rent and you didn't carry out a reference prior to the start of the tenancy, then your rent guarantee policy may be invalid.
9. Make sure deposits are protected
As with any Assured Shorthold Tenancies (AST), you’ll need to protect tenant deposits using one of three government deposit protection schemes.
10. Be a considerate landlord
When filling any empty rooms, be a friendly landlord and give your existing tenants a chance to get involved in choosing their new housemate. They’ll appreciate it, and you’re less likely to have any headaches if the housemates all get along with one another.
For more information, download SpareRoom’s free Renting by the Room Guide, packed full of helpful tips and case studies on how to make this strategy a success for you.
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