One in seven pensioners are considering taking in a lodger to help pay the bills, a new survey has found.
In fact, with nearly half (47%) of retirees struggling to live off their pension, up to 15% of retired homeowners – dubbed granlords – are looking to rent out a room to make ends meet and boost their retirement income, according to a survey by More Th>n Home Insurance.
"On average, those over 65s polled receive a weekly retirement income of £224. When just over £190 of living costs are deducted per week, pensioners are left with just £33 to spend as they like. It's perhaps no surprise, therefore, that so many are considering using their home as a source of additional income," the insurer said in a statement.
The rise in the number of those considering becoming a 'granlord' has been mostly seen in London, with 20% of homeowners saying they felt they have no choice but to let a room out.
The insurer also found more than half of people questioned (51%) did not feel they were aware of the responsibilities of being a landlord or the type of insurance cover they would need.
For example, there are income tax implications of being a landlord. Under the government's 'Rent a Room' scheme you can earn up to £4,250 a year tax-free by letting out a room – a total of £354 a month in rent.
Any more than that and you will have to fill out a self-assessment form and pay income tax.
And in terms of insurance, having a lodger can particularly affect your contents insurance if you ever need to make a claim.
Matthew Poll, of More Th>n, said: "After years of working, being forced to become a landlord after retiring is far from an ideal situation but it's clear that many people are considering this to provide additional financial support.
"For those looking to bring in a lodger, it's important that they make sure they choose the right person but it's also vital that they have the right cover and I'd urge anyone considering this to contact their insurer."
More Th>n has put together a checklist of things to consider if you are thinking of taking in a lodger:
- Cover: Home insurance companies have different policies regarding lodgers. If you're considering letting a room, contact your insurer to inform them of your circumstances and discuss whether or not you have the right cover in place.
- Interview: Thoroughly screen any prospective lodgers to make sure you find the right person for you and your home. At the very least, find out their current state of employment and how long they intend to rent for. At the first meeting you should always have a Lodger Application Form to hand to collect all the necessary details about a lodger, such as their employment details, next of kin, bank details and NI number.
- Checks: For very little cost you should run professional various checks on each of your lodgers, including credit and reference with a recommended rent checker service, so that you know they are of sound character and will be able to pay the rent.
- References: Make sure you get references, preferably from a previous landlord.
- Contract: Ensure your lodger signs a formal contract or Lodger Agreement when they move in detailing the agreement set and inventory to avoid any problems further down the line.
- Rights: After you have found an appropriate lodger you should take the time to familiarise yourself with their rights regarding the property from a reputable company or website.
- Make the house rules clear: Create a 'starter pack' for a prospective lodger that lets them know where they can and can't go in the house, expected behaviours and responsibilities, appliance information, emergency information and contact numbers and local information.