How To Make A Lucrative Income From A Spare Room

Making a lucrative income from a spare room in your house is not as hard as it may seem.

There is currently a spare room rental boom due to the lack of affordable accommodation, the taxman is on your side and it’s not exclusive to homeowners either!

You can currently earn up to to £7,500 from renting out your room before you have to pay a penny of tax.

Sounds good right?

When the cost of living continues to rise quicker than wages, looking for extra income streams becomes even more important.

Having just one income stream is playing Russian Roulette with your financial future, the same way as throwing all your savings into one investment – never put all your eggs into one basket – as the saying goes.

So when looking for extra ways to make cash without too much hassle, renting out a room in your house stands out as one of the best options.

If you are living on your own it can also be a good source of company too, especially if you take on a regular client who you are able to build up a relationship with.

My step dad used to rent a room from an old lady years ago when he was working away in Sheffield.

He worked a four on, four off, twelve hour shift pattern, making it impossible to commute back and forth from Manchester.

He had reasonably priced digs in the comfort of someone’s own home, and the lady earned some much needed income, as well as gaining some welcomed company.

Everyone was a winner.

If this sounds like something you might look into, I have put together this guide to get you prepared and ready to make a lucrative income from a spare room in your house. 


The starting point for any business venture.

You must make sure there is a market for your side business before putting in any effort and money into preparing for guests.

This is about making an income from a spare room, so you want to be sure you won’t be wasting your time.

Plus you want to make as much money as you possibly can.


Most homes aren’t going to come with en suite facilities, that shouldn’t necessarily be seen as a negative thing as it could be an opening for you to compete against your rivals on price.

Someone looking to put their head down every night when working away will not always want the same treatment as a couple on a romantic break.

You’re offering a home-from-home stay, not a five star Ritz experience.

Find out what your potential rivals are charging and see if you can come in at a good competitive price without under pricing yourself for what you offer.

Remember your worth!

You also have the option of taking on a long-term permanent lodger, running a B&B type service, or both if you have more than one room.


What does your location have to offer?

Your local town doesn’t have to have thousands of attractions, it may just be a busy town with plenty of workers and a lack of affordable housing available.

You may live near a football ground with regular travelers to the ground.

I’m a Manchester United season ticket holder and you wouldn’t believe the amount of people who make trips encompassing hundreds of miles to travel to the ground.

These guys often stay over rather than travel back the same night.

If you live near a sports or entertainment venue you could be quids in with regular guests.

Scenic areas are rife with visitors looking for somewhere to stay, you could take advantage of a prosperous tourist trade.

Preparing to make an income from a spare room

Making an income from a spare room doesn’t require you to spend a fortune to get it prepared for guests.

You can pick up some great items in charity shops, sites such as eBay and Gumtree, and there are also some real bargains to be found on Facebook buy, sell and swap sites.

It doesn’t just stop with furniture either.

You can pick up paint for a fraction of the retail price from charity shops too.

If you are running more of a B&B type enterprise then you will need to consider tea and coffee making facilities, but a lodger would just use your kitchen at their own convenience.

You could play it really smart if you don’t have a spare TV if your mobile phone contract is up for renewal.

Mobile phone brokers such as Carphone Warehouse will frequently run offers with free TVs and games consoles as part of the package – a great way to cut down your start up costs.

Upselling services

Upselling additional services means you can make the very most financially out of every client that comes through your door.

Every business does it – do you want fries with that? – as you must maximise your earning potential from every single customer.

There are things you can offer which you can add additional charges for:


Some guest houses now offer breakfast as an added extra rather than include it in the overall price.

This offers breakfast dodgers the chance to keep their costs down a bit and helps to prevent too much food wastage for the owner.

Consider whether you want to offer it as standard, or at a separate cost.

Evening meals

A great way to make the most out of your extra income without too much effort on your part.

Most B&Bs don’t offer an evening meal, the clue is in the business description.

You may get an on-site restaurant in a hotel, but that is often out of many people’s budget.

Consider offering an evening meal, it can just be what you were going to eat anyway, or even left overs from the freezer.

It won’t add a great deal to you overheads, if at all, but could be a lucrative upsell on your services.


A guest staying for multiple nights may appreciate a laundry service.

That could just be as simple as washing and drying clothes, or you could also add an ironing service and really maximise your earnings.

One look around my office tells me the majority of people don’t care for ironing very much!

Long term lodger vs B&B

You could potentially earn more per night by running a B&B type service, however the long term gain of a lodger may be more lucrative over the course of a year.

If you take my step dad’s example, the lady he lodged with gave him a favourable rate to secure his custom four days a week.

You could look at doing the same if your client is traveling to work, and try to upsell other services to bump up your profit margins instead.

If there are days the room is lying vacant, you could open that up to a B&B client in the right place at the right time.

Going down the B&B route means you could have quieter periods, but you can charge a higher day rate.

Work out what is best for you by trialing both, or simply by researching what type of customer your local area is likely to bring.

Using a bit of trial and error could be the easiest way to work out which is the best option for you to make the most income from a spare room.


With average lodger incomes anywhere up to £695 per month in London, and £509 for the rest of the UK, you can certainly see why the trend for letting spare rooms is growing.

Websites such as Easyroommate, Gumtree and Hosts International make it incredibly easy to fill your spare room on a long term basis. 

Where as Airbnb and Wimdu help to find guests on a B&B or more ad hoc basis.

These sites can help you to publicise your room, give guidance on safety, tax and insurance, but the responsibility lies with you to make sure you stay within the rules.

You could still go down the good old fashioned route of placing an advert in local shops too, this will advertise your service to people directly out and about in your local town.

What about tax and benefits?

Under the rent a room scheme you are now able to earn £7,500 a year without paying any tax for renting out a furnished room.

If you go over that threshold you will need to fill out a tax return.

If you’re taking in B&B guests, be aware there is a fine lie between taking in the odd guest and running a business, so seek the advice of an accountant if you’re unsure of the tax rules and are regularly taking in paying guests.

Insurance obligations

You should let your insurer know if you’re taking in a lodger or occasional B&B guests.

Never wait until it’s due for renewal as it’s unlikely to have an affect on your premium, however, fail to notify them and they could turn down a potential claim if you haven’t kept them informed about your guests.

At the end of the day accidents happen!

Will making an income from a spare room affect my mortgage?

It is a wise precaution to let your mortgage provider know you are renting out rooms.

Your provider is unlikely to be unreasonable as long you live in the property and share the accommodation with your lodger.

They will want to make sure that the lodger won’t have any rights if the property is repossessed, so you may need a formal letting arrangement in place.

Your lodger may be required to sign a consent form to say that they’re aware the home is mortgaged.

A short-term B&B is a bit of a grey area, a mortgage consent form would be impractical in this situation so the best advice is to let them know regardless to make sure you’re not over stepping the mark and breaking any rules.

If your mortgage provider thinks you are getting close to using the premises for commercial use, it could breach the terms and conditions of your mortgage you may have to pay higher interest or switch your mortgage deal.


Housing association, council and private tenants should ask permission first.

It is just good practice to know you’re not breaking any rules.

For private tenants, if there is nothing in your tenancy agreement you should be good to go.

Following the announcement in last years budget, landlords can no longer stop tenants from subletting rooms on a short-term basis.

As I said though, check your tenancy agreement to make sure your landlord hasn’t added any clauses.

Final word

There really is great money to be made by securing an income from a spare room.

It is one of the best side hustles you can adopt, for the short-term whilst you save for something, or as a long term earner.

Always do your research as stated in the guide above, and get your empty space making a great second, or full time income.

Are you currently making an income from a spare room?

Related Articles:

Rent Out Your Parking Space

Save Cash On Your Traveling Costs Using Love Home Swap

6 Hobbies You Can Turn Into A Side Hustle

Thinking Thrifty

Thinking Thrifty

David Naylor is the editor of the Thinking Thrifty blog. An award winning personal finance and lifestyle blogger, he shows how it is possible to live extremely well for less.
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9 thoughts on “How To Make A Lucrative Income From A Spare Room

    1. It really is a great money spinner and a money saver at the same time. If you can get in £70 per week you’ll have made £3,640 over the course of one year!

  1. It’s a good idea if the circumstances are right. It would never work for us as we don’t have the room anyway, but if we did, we probably wouldn’t feel right with someone else knocking about the house. They probably wouldn’t feel right after a sight of the husband in his pink spotty dressing gown either! 😀
    Lee recently posted…Stationery Addiction: Episode 1My Profile

    1. Hahaha this made me lol! I’d be happy with someone staying a twice a week or so on a B&B basis, a full time lodger wouldn’t suit us right now though.

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