Using the rent a room scheme

BenKing

I have recently bought a house ( mortgaged ) that has additional bedrooms, I was thinking of taking advantage of my central location to rent rooms out to make some money on the side, and accelerate paying off my mortgage.


I see the govt, has a rent a room scheme where I can get 4250GBP a year tax free through this scheme.

Does anyone have any experience of using this program? Also is there a chance my mortgage provider might increase my interest rate if I let a room?


Thanks!

booksurr

have you read the guidance?
https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
what is it you don't understand ?

it would be rare for your l;ender to increase the rate because of a lodger, equally however they will not take the extra income into account when assessing your affordability

your insurance may or may not be affected, depends on the insurer

if you have 2 or more lodgers you open yourself up to having to pay capital gains tax when you finally sell the house

gazter

BenKing wrote: »

I have recently bought a house ( mortgaged ) that has additional bedrooms, I was thinking of taking advantage of my central location to rent rooms out to make some money on the side, and accelerate paying off my mortgage.


I see the govt, has a rent a room scheme where I can get 4250GBP a year tax free through this scheme.

Does anyone have any experience of using this program? Also is there a chance my mortgage provider might increase my interest rate if I let a room?


Thanks!

It would be highly unusual for a mortgage lender to want to change rates for a lodger. As long as you make it clear that you arent creating a tenancy and you are not wanting 'consent to let', but it is possible that the person on the other end of the line might not interpret your request correctly.

For the 'rent a room' as long as you stay under that threshold you arent required to fill in any tax forms.

G_M

Mortgage lenders don't care about lodgers as lodgers have few rights. Tenants are different.....

Insurer may care though - check!

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with their resident landlord, and shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' and 'same property' (S31 & Schedule 1 (10).

There is advice for landlords considering taking in lodgers here:

LodgerLandlord (General information site)

Landlordzone (General advice on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (Government scheme for tax-free income from lodgers)

21 tips (Tessa Shepperson's Lodger Landlord website)

Micromat

booksurr wrote: »

if you have 2 or more lodgers you open yourself up to having to pay capital gains tax when you finally sell the house

More of a question really! Does the rule about the number of lodgers mean lodgers who are unrelated? What I mean is, if a room was rented to a husband and wife would that be classed as 1 lodger?

booksurr

Micromat wrote: »

More of a question really! Does the rule about the number of lodgers mean lodgers who are unrelated? What I mean is, if a room was rented to a husband and wife would that be classed as 1 lodger?

you will need to confirm for yourself, but everything I have read makes me think it relates to "households" - so if the couple pay one set of rent covering "the couple" then that is "1" lodging "household"

If each person pays separately then obviously that is "2" lodgers

needless to say HMRC guidance is imprecise
http://www.hmrc.gov.uk/manuals/cgmanual/CG64702.htm