More Brits taking lodgers to pay debts and bills
By UK CreditCards.com
Published: 28 February 2012
With many Britons needing to supplement their income to make ends meet, some are coming up with ever more creative ways to make money. One increasingly popular scheme seems to be letting out spare rooms to lodgers.
Research by the website Spareroom.co.uk suggests that January 2012 saw the highest ever number of homeowners renting out rooms, with many thought to be using the extra money to pay bills and make debt repayments.
Room-renting "spikes" in January
There was a significant increase in the number of people renting out spare rooms in January, according to Spareroom.co.uk's statistics. The website's figures indicate that almost 6,000 new homeowners started renting out rooms in their own homes last month -- 83% more than in December 2011 and 22% more than in January 2010.
Householders get almost £400 per room
Room rental prices may help to explain why many are choosing this route. According to the website's research, lodgers pay an average of £398 per room per month, with those in London typically paying £677 per month. This means that homeowners with a spare room can earn almost £5,000 a year, or more than £8,000 in London.
Furthermore, income generated in this way comes under the government's rent-a-room scheme. This allows householders to earn up to £4,250 a year from renting out a spare room before they start paying tax on their income.
Spare room income relieves financial pressure
The recent room rental spike is likely to be due to a combination of a post-holiday credit card hangover and high winter fuel bills.
In light of this, Matt Hutchinson, a director at Spareroom.co.uk, finds the trend unsurprising. He said in a statement that millions across the UK are struggling with loans, credit card debts, living expenses, mortgages and regular bills.
"If that isn't bad enough, unemployment is still rising and the economy is showing little by way of improvement," he said.
Hutchinson also pointed out that, without taking in a lodger, some people could be at risk of losing their own homes. He also noted that the practice is helping to ease the pressure on the rental market in areas with high tenant demand, such as London.See related: UK households showing first signs of recovery?; Survey: Brits 'more committed to spending than saving'
Recent stories - Research, statistics:
A recent report on financial capability based on six elements shows many Brits need to hone their financial skills. This short series will give tips on how to improve each area ...See Capability
The Payments Council took a look back on the past decade in a February 2013 report, which found that Brits are splashing out on fun -- and moving toward a cash-free lifestyle ...See Spending statistics