Homeowners can make around £400 extra per month

Homeowners in university towns such as Sheffield and Leeds could make a potential £400 per month plus, by renting out their spare room, new research reveals.

The research, conducted by self storage company Space Station, identified top university towns across the UK and found an average price of rooms to rent in those areas.

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Homeowners have the opportunity to make a sizeable income from the number of students living in these cities.

To help homeowners, below are five tips covering the essentials about renting a room out.

Homeowners can earn up to £7,500 tax free when taking in lodgers, providing the room is furnished.

However if you live with a partner, the amount halves to just £3750. Remember, you must pay any additional income tax and capital gains tax on any money you make above the threshold.

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When looking to rent your spare room out, remember to consult your mortgage provider and insurance companies to determine whether there will be any implications, or to see if you will require any additional insurance.

Landlords need to have an Energy Performance certificate and a gas safety certificate if the house has gas. You can obtain one of these certificates by getting an energy assessor to conduct a review of your property, which will cost between £60 and £120. If you are in any doubt, make sure you read the government’s guidance for resident landlords to ensure you are legally safe and have all the correct documentation in place.

Once you have all the legalities in place, you can begin to set your own ground rules for future tenants. By law, lodgers must have access to a kitchen, and washing and toilet facilities, and you must keep the property safe and in good repair. Setting your own ground rules enables you to think about what you would require from a future tenant and their role and responsibility within the household.

Before taking on any potential lodgers, it is important that you conduct checks to ensure they are the right candidate. These checks can be carried out by yourself, by a tenant referencing agency or a letting agent registered with the Association of Residential Letting Agents (ARLA). Make sure you are as thorough as possible throughout the process and don’t be afraid to do some detective work by looking at their online presence.

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Vlatka Lake, Marketing Director at Space Station said: “With over 100 universities across the UK, there are many possibilities to make some money from the extra space in your house.

“Taking in a lodger is a great way to make extra cash. However, it is important for potential lodger landlords to understand the commitment involved and to make sure their homes are well prepared to take in another person.”

For tips on what to consider when taking in a lodger, go to http://www.space-station.co.uk/blog/thinking-about-renting-your-spare-room-heres-how