How to Set the Rent for a Room

Thanks to the changes in the Rent a Room Scheme made in the new budget, from April 2016 UK landlords will be able to make up to £7,500 TAX FREE through renting out a spare room in their home, as opposed to the previous £4,250.

There are just a few criteria that you have to fulfill:

  • You must only rent out a space that is located on your main property. This residence must also be part of your residence (it can be a whole floor but not a self-contained flat).
  • It must be furnished (unfurnished rooms do not qualify).
  • You must be the resident of the property. It is not necessary to be the owner, however you must have the landlord’s consent in order to benefit.
  • If you don’t typically fill out a tax return and the income is below £4,250 (or £7,500 after April 2016) you don’t even have to do anything, the exemption is automatic. If the amount you earn is higher, just let the tax office know.
  • All of this however, does not mean that you know what a competitive rental price is. If you’re struggling to work out what rent you should charge, here are a few tips to help you set the rent for your accommodation.

    Different Criteria to Take into Account

    To easily find a tenant for your room, you need to find a price that matches the key characteristics of the room that you're renting out. If you are free to fix the price of the rent, in most cases, you just need to use your common sense to attract tenants.

    The first important criteria that will affect the price of rent is the location of the accommodation. If you live in a sought-after area where there is high demand for accommodation, the price you set for your accommodation will certainly be higher than the average for your city/town. On the same thread, as everyone knows, some towns are simply more expensive than others. The ameneties near to your accommodation also have an effect on the rent price: Is it near a tube station? A bus stop? A supermarket ? A university?

    The size of the room works as an easy guide for calulating the rent that you should set: The more m² it comprises, the higher the price should be. The amount of space is directly linked to the comfort offered by a room. The presence of a private entrance, or bathroom, or internet connection, are also key features to take into account when setting the rent for a room.

    The length of Stay and Covering the Bills

    The final criteria that affects the rent that you should set is :the length of the tenant’s stay. If you are looking for tenants to occupy your room on a short-term basis, you can apply a higher price per night than you would if you were renting it out for several months or a year.

    The rent you set should also cover the cost of the tenant’s share of all bills; to do so, you should work out approximate usage of the tenant in terms of heating, water and electricity.

    Just a reminder, in order to benefit from the tax exemption allowed by the Rent a Room Scheme, the room must be furnished and you must be a resident in the property.

    The Competitive Edge: Roomlala Gives You a Helping Hand

    To help you fix the rent of your room to rent, Roomlala recommends a rental price to you when you are creating your ad on the site. The rent is calculated in relation to the other rooms to rent on the site in your area at the time that you post your ad. It’s pretty handy for easily setting the rent and not ending up more expensive than your neighbours!