Making Money from Your Home

The Rent a Room scheme (gov.uk) is one of the most generous tax breaks available to homeowners. It allows you to earn up to £7,500 per year completely tax free by letting out a furnished room in your main home.

Before advertising for a lodger or starting any income-generating activity from your home, you must check several things. Getting these wrong can have serious consequences.

Research what rooms are renting for in your area. The rent you can charge depends on your location, the size of the room, whether it is furnished, what facilities are included, and whether bills are included in the rent.

• SpareRoom is the most popular platform for finding lodgers in the UK. Use their rent calculator to check average room rents in your postcode.
• Include or exclude bills: Many lodgers prefer an all-inclusive rent because it simplifies budgeting. If you include bills, factor this into your price and remember that everything your lodger pays counts toward the £7,500 tax-free allowance.
• Room quality matters: A well-furnished room with good natural light, decent storage, and access to a clean bathroom will command higher rent. Small investments (a good mattress, adequate lighting, fresh paint) pay for themselves quickly.
• Parking and transport links: If you can offer a parking space or are near good public transport, you can charge more.

Take your time choosing a lodger. You will be sharing your home with this person, so compatibility matters as much as ability to pay.

• Phone or video call first. This saves time for both of you. Discuss basics: work situation, lifestyle, how long they need a room, and any deal-breakers on either side.
• In-person viewing. Always meet a potential lodger in person before agreeing anything. Show them the room, the shared spaces, and explain any house rules.
• Check references. Ask for a reference from a previous landlord or housemate, and verify their employment. A genuine lodger will not object to this.
• Verify employment or income. Ask to see a recent payslip or employment contract. If they are a student, a university enrolment letter.
• Trust your instincts. If something does not feel right during the viewing or the conversation, it is perfectly acceptable to decline. You do not need to give a reason.

You are legally required to check that your lodger has the right to rent in England (gov.uk) before they move in. Since February 2016, every person who rents out a room in their home in England, including homeowners with a single lodger, must verify that the lodger has a legal right to rent in the UK. This applies to all lodgers aged 18 and over, regardless of nationality. You must check all potential lodgers equally; it is against the law to only check people you think may not be British citizens.

How to check: Ask your lodger for their original identity documents (typically a passport or driving licence for British citizens). Check the documents are genuine, that the person matches the photograph, and that they are allowed to be in the UK. Record the date you made the check and keep copies of the relevant document pages.

If your potential lodger is not British, ask them for their Right to Rent "Share Code", which they can apply for online with the Home Office. You then verify this using the Home Office online checking service (gov.uk). The Home Office will provide a certificate that you must keep. It will state when the person's Right to Rent expires. You must carry out a follow-up check on the expiry date, or one year after your first check, whichever is later.

The penalty for failing to carry out a Right to Rent check is a fine of up to £5,000 per lodger for a first offence, rising to £10,000 for a repeat offence.

An EICR (Electrical Installation Condition Report) is not legally required for lodger arrangements. Nor is an EPC (Energy Performance Certificate). You are not legally required to protect a lodger's deposit in a tenancy deposit scheme (unlike tenant deposits), though a clear written lodger agreement covering rent, notice periods, deposit terms, and house rules is strongly recommended. The Renters' Rights Act reforms coming into force on 1 May 2026, including the abolition of Section 21 "no-fault" evictions, do not apply to lodger arrangements. A lodger is an "excluded occupier" under the Protection from Eviction Act 1977, and you retain the right to ask them to leave with reasonable notice, typically matching the rent payment period.

Even though your lodger is not a tenant, you have a duty of care to anyone living in your home.

• Gas safety: This is a legal requirement. Under the Gas Safety (Installation and Use) Regulations 1998, you must arrange an annual inspection by a Gas Safe registered engineer covering all gas appliances, pipework, and flues you have provided. The engineer will issue a Gas Safety Certificate (CP12), and you must give a copy to your lodger and keep your own copy for at least two years.
• Smoke and carbon monoxide alarms: The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 (as amended in 2022) formally exclude lodger arrangements where you share accommodation with the occupier, so you are not legally required to comply with those specific regulations. However, you still have a common law duty of care. Our strong advice: install a working smoke alarm on every storey and a carbon monoxide alarm in every room with a fixed combustion appliance. "Not legally required" does not mean "not necessary."
• Fire escape: Ensure your lodger knows the escape route in case of fire.
• Locks: A lock on your lodger's bedroom door provides privacy and security for both of you.

You must notify your home insurer before your lodger moves in. Failing to do so could invalidate your entire policy, not just for lodger-related claims, but for everything. Some insurers will simply add a note to your existing policy; others may charge a small additional premium or add exclusions (commonly excluding accidental damage, or excluding theft without signs of forced entry). Some will not cover lodgers at all, in which case you will need to switch to a provider that offers a "home insurance with lodgers" or "live-in landlord" policy. You do not need a separate landlord insurance policy, that is for properties you do not live in.

Check that your policy includes adequate public liability cover. If your lodger or one of their guests is injured in your home, a trip on a loose rug, a fall on the stairs, you could be held liable. Most home policies include some liability cover as standard, but it is worth confirming the level is sufficient now that you have a paying occupant.

Your contents insurance covers your possessions, not theirs. If your lodger's laptop is stolen or their clothes are damaged in a leak, your policy will not pay out for them. Advise your lodger to take out their own contents insurance, specialist single-room renter's policies are available and typically cost very little.

If you want to let a room in your home on a short-term basis (to guests rather than a permanent lodger), platforms like Airbnb, Vrbo, and Booking.com make this straightforward. The Rent a Room scheme applies to short-term lets in your main home in exactly the same way as for lodgers, so you can earn up to £7,500 per year tax free.

• 90-day rule in London: In Greater London, you can only let your entire home on a short-term basis for a maximum of 90 nights per calendar year without planning permission. This applies to whole-property lets, not to renting a room while you are living there.
• Mortgage lender consent: Some mortgage lenders require consent for short-term letting. Check your terms.
• Insurance: Standard home insurance is unlikely to cover short-term guests. You will need specific host insurance. Airbnb provides some host protection, but check the terms carefully and consider additional cover.
• Time commitment: Short-term letting requires more active management than a lodger: cleaning between guests, managing bookings, providing fresh linen, and being available for check-in and check-out.
• Leasehold restrictions: Many leases prohibit short-term letting. Check your lease before listing.

If you have unused space, you can generate income without sharing your living areas with anyone.

Got a garage, loft, or shed you are not fully using? Platforms like Storemates and Stashbee connect homeowners with people who need somewhere to keep their belongings. Self-storage units in the UK cost £100 to £200 a month, you can undercut them and still earn £75 to £150 a month for a dry, secure garage in an urban area.

• Insurance: This is the one people get wrong. Your home insurance covers your buildings and your contents, not other people's belongings stored on your property. If their items are damaged by a leak, a fire, or theft, your policy will not cover their loss. You need to make two things clear in your storage agreement: first, that you are not liable for their items; second, that they should arrange their own contents or storage insurance. Specialist storage insurance is widely available and inexpensive. On your side, notify your home insurer about the arrangement, and check your public liability cover is adequate in case someone is injured accessing the space.
• Written agreement: Use a written storage agreement covering what can and cannot be stored (explicitly prohibit hazardous, illegal, or flammable items), access hours, notice periods, and liability. If you are letting a detached garage for storage, check your mortgage terms and lease. Also check whether the arrangement could be classed as commercial use for council tax or business rates purposes, this is rare for small-scale domestic storage, but worth being aware of.

If your home has a driveway, garage, or dedicated parking space you do not always use, platforms like JustPark and YourParkingSpace let you rent it out. Near a city centre, station, hospital, or stadium, a single space can earn £50 to £200 a month with almost no effort. HMRC's £1,000 property income allowance means the first £1,000 of this income is tax free, no return needed.

• Insurance: Notify your home insurer. If someone trips on your driveway or damages their vehicle on your property, your public liability cover needs to respond. Most standard home policies include this, but the insurer must know about the commercial use. If you are renting out a detached garage space for parking, consider whether your buildings insurance covers it, garages can be excluded from some policies. The person parking on your driveway is responsible for their own vehicle insurance, not you, but make sure your liability position is clear.
• Legal: Check your mortgage terms and your lease (if leasehold) for any restrictions on commercial use of your property. If you are on a new-build estate, check the estate management company's rules too, some restrict parking arrangements.

Many businesses can be run successfully from home. However, there are legal and practical considerations that you must address before you start.

As covered above, lodger income up to £7,500 per year is tax free under the Rent a Room scheme. Above £7,500, you must file a Self Assessment return.

If you are self-employed and work from home, you can claim a proportion of your household costs as a business expense. There are two methods.

• Written agreements: Always have a written agreement for any arrangement, whether lodger, storage, parking, or business use.
• Inventory: For lodgers, create a signed, dated inventory of the room contents and condition before they move in. Photograph everything.
• Deposit: Take a deposit (typically one month's rent for a lodger). Agree in writing the conditions for its return.
• Insurance: Review and update your insurance for every new activity. This includes home insurance, contents insurance, and any specific business or host insurance.
• Regular inspections: For lodgers, agree in the lodger agreement that you may inspect the room with reasonable notice (for example, 24 hours).

• Provide locks on bedroom doors for privacy and security.
• Ensure smoke alarms and carbon monoxide alarms are working.
• Share emergency contacts and explain escape routes.
• Respect their privacy and the terms of your agreement.
• Give proper notice (as agreed) before ending the arrangement.

Having a clear exit process avoids disputes and awkwardness.

• Notice period: 28 days is standard for lodger arrangements. Either party can give notice.
• Deposit return: Inspect the room against the inventory. Return the deposit promptly, minus any agreed deductions for damage (not normal wear and tear).
• Key return: Collect all keys on the day the lodger leaves.
• Reference: If the arrangement went well, offering a reference is a kind gesture that helps your lodger find their next room.

This is a longer play, but worth knowing about. If you have off-street parking, you can install a home EV charger and rent access to it through apps like Co Charger or JustCharge. You set your own price per kWh and availability. As EV ownership rises, demand for residential chargers in areas without public infrastructure is growing fast.

Installing an EV charger is classed as "notifiable work" under Building Regulations Part P because it involves creating a new electrical circuit. The work must either be carried out by an installer registered with a competent person scheme (who can self-certify compliance) or be notified to your local building control body. The installer must also notify your Distribution Network Operator (DNO) to confirm the local grid can handle the load. Since July 2022, all new domestic chargepoints must be "smart", capable of scheduling charging and responding to grid demand. Planning permission is generally not required for standard domestic installations under permitted development rights, following changes made in May 2025.

Sharing your charger commercially is a form of business use of your property. You must tell your home insurer. Your standard home insurance is unlikely to cover damage to someone else's vehicle while it is charging on your property, or injury to a person accessing your charger. Check whether your public liability cover extends to this use, and consider specialist EV charger liability cover if you are earning regularly from it. The charger itself should come with a manufacturer's warranty (typically 3 to 5 years), and your installer should provide a compliance certificate confirming the work meets building regulations.

The original EVHS grant for homeowners in houses has closed. However, if you are a homeowner in a flat or a renter, the OZEV EV Chargepoint Grant currently offers up to £350 per socket (rising to £500 from 1 April 2026), with the scheme extended to 31 March 2027. A typical charger costs £800 to £1,200 installed, and it can also add value to the property when you come to sell.

Under permitted development rights, you can make significant improvements without a full planning application. For a terraced house, that includes a single-storey rear extension of up to 3 metres (or up to 6 metres with prior approval from the council), a loft conversion adding up to 40 cubic metres, and various internal and external improvements. The right extension can add 15 to 20% to a property's value. Even simpler upgrades, a new kitchen, a bathroom refresh, converting a garage into a usable room, deliver meaningful returns.

Even where planning permission is not needed, building regulations approval almost always is. This is a point many homeowners miss. An extension must comply with structural, fire safety, energy efficiency, and drainage standards. You will need either a building notice or full plans application to your local building control, or you can use an approved inspector. A loft conversion requires building regulations sign-off. Even replacing windows or a boiler can trigger building regulations in certain circumstances.

Notify your home insurer before starting any building work. Any structural alteration changes the risk profile of your property, and failure to notify could invalidate your buildings insurance. For major works like an extension or loft conversion, consider specialist renovation insurance (sometimes called self-build insurance) which covers risks during the construction period, including damage to the existing structure, injury to workers, and theft of materials. Once the work is complete, update your buildings insurance to reflect the increased rebuild cost and the additional square footage.

If you are relying on permitted development rights, consider applying for a Lawful Development Certificate (LDC) from your local authority before you start. This is not mandatory, but it provides formal confirmation that your project is lawful, invaluable when you come to sell, as a buyer's solicitor will ask for proof that any alterations had the necessary consents.