By
Jo Thornhill
Last updated at 10:02 PM on 2nd April 2011
Thousands of homeowners are set to cash in on major events such as the Royal Wedding later this month and the London Olympics next year by letting out a room – or even their entire home. And tourists, event staff, athletes and their families are queuing up to become tenants.
There is big money to be made for those with comfortable accommodation in prime locations – and with an abundance of websites enabling homeowners to advertise rooms and hook up with potential visitors, it has never been easier to become a part-time hotelier.
But there can be pitfalls. Letting your property will affect your home insurance cover and there may be tax to pay on the income.
Going for gold: Gareth Morris plans to let out his flat during the 2012 Olympics
Camilla Shaughnessy, founder of events-based accommodation website
eventfulstays.com, has already seen a 40 per cent increase in properties
listed for rent during the London Olympics since the start of this
year.
She says someone with a three-bedroom property that sleeps six and is
close to the Olympic site in Stratford, east London, could command up
to £3,500 a week during the Games. The same property, for an ordinary
holiday let, could bring in only £1,800 a week.
‘We have some homeowners who have already been offered 250 to 300 per
cent more for stays during the Olympics than the usual going rental
rates,’ says Shaughnessy. ‘Properties with unusual features, such as a
gym or swimming pool, can command even higher prices.’
Stephen Rapoport, founder of crashpadder.com, which matches
homeowners who want to let a room in their own home with those looking
for short-term accommodation, agrees that a shortage of hotel rooms
during big events such as the Royal Wedding, Wimbledon and the Olympics
allows property owners to exploit the situation.
The average cost per night for rooms on Crashpadder is £35, but
prices range from £20 to £100 a night depending on the standard of the
accommodation and the location. Rents are expected to rise dramatically
during the Olympics. And letting a room has tax advantages over letting a
whole flat or house.
There are many websites where homeowners can advertise their rooms
and properties to prospective guests, but they all operate in slightly
different ways. The fees and charges vary.
EventfulStays, for example, takes a 15 per cent plus VAT commission
of all bookings made through its website while Crashpadder takes ten per
cent with no VAT added.
Tenants booking through Crashpadder are required to pay cash to the
homeowner on arrival at the property. With EventfulStays, the homeowner
can receive payment via an electronic transfer through PayPal or a
cheque if they are not comfortable with online banking.
Wembley park: Brian Stewart rents out his driveway near the stadium to fans
Experts say homeowners should be wary of scams or websites that ask
for cash upfront to list your property or rooms to let, particularly in
the run-up to the Olympics.
Gareth Morris already has one eye on the cash to be made from the
Games. The 53-year-old business consultant plans to let his two-bedroom
flat in Islington, north London, during the big event next year.
He has listed his property on EventfulStays and has had quite a bit
of interest. Early estimates suggest he could make as much as £2,000 a
week during the Games.
‘A friend suggested the idea of letting my flat since it is so near
to east London and the Olympic site at Stratford,’ says Gareth. ‘When I
saw how much could be made, I was definitely interested. This will help
towards my mortgage costs.’
Gareth admits there are risks to letting his home to strangers, but
says he will lock away all valuables and personal items before the
rental, as well as any sensitive information such as bank statements or
other ID.
There will also be insurance implications to consider. Gareth has not
yet spoken to his home insurer, but most will continue to cover
properties while they are being let temporarily, though with certain
exclusions.
Rebecca Holmes of insurance giant Aviva says it is the duty of
policyholders to tell their insurer of any plans they have to let a room
or their property.
‘Aviva would offer cover, provided the customer tells us the dates
the home will be rented,’ she says. ‘Loss or damage caused by theft,
malicious or accidental damage by the temporary occupants – whether
they are long-term lodgers or paying guests – will not be covered
during their stay.’
In the case of Aviva, the other major perils – fire, storm damage
and escape of water – would be covered as normal, as would theft and
malicious damage if caused by anyone other than the tenant. This policy
applies whether you let just one room in the home and you are still
present or you let out the whole property or swap houses with family or
friends.
Holmes says: ‘Different insurers will have different policies and
some may not cover policyholders if they let rooms or their property,
for example during the Olympics, so consumers should be warned and
always disclose their plans to their insurer.’
It is not just housing that can make money. Brian Stewart, 44, a
research analyst in the telecoms industry, has a double driveway at his
house in Wembley, north-west London, but needs only one space.
He rents out the spare one for £15 a day during major music and sporting events at Wembley Stadium.
For the three years he has been doing this through the website
parkatmyhouse.com, Brian has had 270 bookings, netting him £3,700.
Parkatmyhouse takes a 15 per cent commission, inclusive of VAT on
bookings, and Brian has to take the payments electronically through the
website using the PayPal service.
Brian says anyone living near a football or cricket ground, or large
music arena for example, could stand to make quite a bit of money doing
the same.
‘I live within spitting distance of Wembley Stadium so a few years
ago I looked into the possibility of renting out the drive,’ says Brian,
who lives with his partner, Selina Vincent, 43, a logistics manager.
‘The stadium charges about £30 for parking and other car parks in the
area are up to pound;25 so I decided to undercut that. I also
offer drivers a cup of tea and use of my toilet on arrival – that
seems to go down well. It is no hassle to me at all and has turned into a
nice little earner.’
Brian’s son from a previous relationship, Joshua, 12, has also become
interested in the enterprise. ‘Joshua is thinking about offering a car
wash service for a few pounds to those who might want it,’ says Brian.
‘I think it’s a great way to teach him about earning.’
Other websites, such as your parkingspace.co.uk and parkonmy
drive.com, enable those with spare spaces to advertise to drivers. Most
sites take a commission on bookings, typically 15 per cent, while others
charge an annual fee, such as £10, for people to list their parking
space for hire. Anyone who lets someone park on their drive for a fee
should ensure that they have a contract in place to remove any liability
for theft or damage to the vehicle while it is on their property.
Most parking space websites have terms and conditions already laid
out that users must stick to, so this adds an extra layer of protection.
Ian Forshew, 30, and his girlfriend, Celia Norowzian, 29, have a
two-bedroom flat in Richmond, southwest London. The location is handy
for rugby games and music events at Twickenham Stadium and also close to
London, so they frequently let their spare double-bedroom to paying
guests through Crashpadder, charging pound;40 a night.
Richmond is also home to big-name companies including auction website
eBay and electronic payment system PayPal, so Ian and Celia get a lot
of business guests.
For Ian, who runs his own business organising Beach Break Live, the
annual music festival in South Wales for students, and Celia, who does
the marketing for the festival, letting their spare rooms brings in
much-needed extra cash.
They have just taken a two-night booking for the Royal Wedding weekend at the end of the month from a French couple.
‘We’ve offered bed and breakfast and also a sightseeing tour into
central London one afternoon as a way of differentiating ourselves,’
says Ian. ‘It’s a bit of fun. We really enjoy hosting and find most
people using Crashpadder tend to be like-minded and easy to get along
with.
‘So far we’ve not had any bad experiences with guests. I think we
have more security going through Crashpadder than many bed and
breakfasts because the website holds applicants addresses and credit
card details.’
Cleaning up But tell the taxman about it
Renting out your home or driveway – like Brian Stewart, right – could be the easiest money you ever make. But remember, the income is taxable.
Taxpayers must declare any cash they make on a self-assessment tax form. This has to be submitted to Revenue Customs along with the tax owed by the end of January each year.
So next January will be the deadline for tax owed in the 2010-11 tax-year, which ends on Tuesday (more at hmrc.gov.uk/sa).
Tax is paid on the income at your highest rate. Non-taxpayers can earn up to £6,035 a year before they need to pay any tax. The only exception is where you let a room, multiple rooms, or a floor in your home, but not the whole house.
Under the Government’s Rent a Room Scheme, if you let a furnished room in your house and allow the guest or tenant to use other shared rooms such as the kitchen and bathroom, you can earn up to £4,250 tax-free. It does not have to be the same tenant or guest staying each night. You can take advantage of Rent a Room whether you are the homeowner or are renting your home.
Any income above the £4,250 threshold is taxable, or instead landlords can choose to pay tax on all of their income but make deductions for any expenses incurred.
For more information on the scheme, visit hmrc.gov.uk and direct.gov.uk.
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