How do I find out the market rate for renting a room out to a lodger?

NibblyPig

I've looked on spareroom but the prices are all over the place, as well as exactly what is being offered.

I live in an excellent location and I have two bedrooms that I don't use so figured I would try to get a couple of quiet 9-5 lodgers.

But I honestly have no idea how to price it. So I was wondering, is there a way to find out? I approached a letting agency and they weren't interested unless I wanted to pay them £750 odd to actually do a valuation / marketing and finding a lodger.

Just wonder if anyone has any suggested technique for this. Many thanks.

DullGreyGuy

Use spareroom.com 

Prices will vary notably because whats on offer varies, you need to find those offering the closest to what you are offering remembering that only wanting mon-fri lodgers (assume thats what you mean by 9-5) or restricting to age groups etc will narrow your demand and so reduce the price. 

Remember that your circumstances can also change the desirability of a property and so price... if you are a single male in their 60s living in the property some may not feel its the right property for them. 

ArbitraryRandom

If this is a new venture, I would also suggest not being too concerned about pitching it at the wrong level to start with.

One of the advantages of lodgers is that the terms can be changed fairly easily and are highly variable as suits the situation.

Lodging tends (not always) to be shorter term than renting, so maybe include in the agreement a rent review IF the licence is continuous for more than 6 months? 

theartfullodger

IMHO price is less important than the right lodger.  The wrong one ain't worth the extra 

Van_Girl

Look for something similar on Spareroom, and put up an advert based on the highest price. If no one rents the room then reduce the price a bit

Tweak it as many times as you need to, test your own market. If you're only looking for Mon-Fri you will have less options to choose from and will need to price accordingly 

Make sure you have good photos, dress the rooms nicely for them with neat bedding etc. Make sure you add photos of all shared areas. Write a detailed description, and have a detailed profile for yourself as well

Personally, I would try one lodger first and see how it goes. Having two straight away is a lot of intrusion in your personal space

TBagpuss

I think all you can do is look at what else is being advertised locally and adjust to take into account how yours compares. Filter out the cheapest and most expensive and loot t where prices 'cluster' 

Roomgo and even Gumtree can also have rooms to let listed so it may be worth looking at those as well as Spareroom.

Then advertise and see how much interest you get  - if you get loads, then maybe you've pitched it a bit low for your specific property and can look at increasing when you re-advertise or on the review, if you get none, reduce it and retry. 

I'd suggest that you keep any initial period short so you and the lodger both have an early get out option of you find you don't 'gel', and you can build in a review of rent at that point (maybe start with 1 or 2  weeks notice and have a reveiw after 2 months, for example 

RAS

One lodger has no impact on CGT. It is possible that two will make you liable for a CGT bill on sale.

Also if you are using the rent a room tax exemption, you may need to balance the number of lodgers, length of contracts and price. Go above that and you'll have additional tax to pay.

sourpuss2021

Are you offering the lodger a gilded cage, a nice place where they will be constrained by your rules and your moods?

If you are then I’d suggest the price you charge ought to be lower than places where the lodger would be living as equals with flatmates from their peer group.

Rules are important because otherwise how would you like it if the lodger decides they want their partner round three nights a week for a meal, movie, and all that follows?  Leaving you a gooseberry in your own property, and maybe even confined to your bedroom!

Double the lodgers means double the risk of this happening.

So you will find rules around guests are necessary, but they do make what you offer less attractive than a tenancy.

By the way I think it is bad practice to impose rent increase during a lodger’s term.  Better to adjust it between people.  But then I don’t like the same lodger for more than a year so others may have different experiences…

sourpuss2021

SpareRoom dominates this market and you don’t need to advertise elsewhere.   

Though unexpectedly I did get decent responses from potential lodgers on OpenRent.  It turns out it’s not just for whole properties.

FreeBear

theartfullodger said: IMHO price is less important than the right lodger.  The wrong one ain't worth the extra 

I learnt that the hard way.... https://forums.moneysavingexpert.com/discussion/5848168/lodger-wanting-to-cookThe replacement, Miss A, stayed for nearly three years. We still talk on a regular basis.. Current lodger, I hardly ever see, but she pays the rent on time and doesn't cause any drama.

artyclarty

I know it is not what you asked but double-check your council's rules on HMOs. I live in a university town so there are a lot of issues with substandard accommodation so stricter rules have appeared over the last few years. If there are more than 2 households living in one dwelling, you must have a licence and comply with HMO regulations - fire doors, hard-wired smoke and CO alarms, gas safety, ECIR regs etc. So we ended up just having one lodger and we used the spare room as an office/2nd living space.