Homing in on cash

From renting out a spare room or garage space to letting a film crew take over, more households are taking advantage of their biggest asset to ease the pressure on their finances.

And that pressure is intensifying. Average household expenditure continues to rise even as incomes stagnate, driven up by utility bills, transport costs and food shopping, according to the most recent figures from the Office for National Statistics.

Meanwhile, research by consumer group Which? found that almost one in ten households have defaulted on a payment.

A third are finding it hard to cope on their current income level, with many turning in desperation to pay-day lenders.

But some households have been fortunate enough to keep the wolf from their door by generating extra cash from their home. Here are some of the popular options:

1. Let out your spare room

The number of Scots boosting their income by letting out space through spareroom.co.uk has jumped 12 per cent this year. The website, which matches prospective tenants and landlords, reports increases of a fifth in both Aberdeen and Glasgow in the number of adverts placed by people looking for lodgers. Scots let out their rooms for an average rent that’s now soared above £100 a week. Average room rates range from £82 in Inverness and £87 in Glasgow to £95 in Edinburgh and £102 in the Aberdeen area.

Taking in a lodger can be tax-effective too, thanks to the rent-a-room relief. This scheme allows those letting out a room to receive up to £4,250 a year in rent for a furnished room in a main home without paying tax on the income.

The relief is available to tenants letting out spare rooms too, as long as they have permission from their landlord.

Similarly, homeowners must check that their mortgage provider is happy for them to rent out their property, while they should also have home and contents insurance in place and check that the income doesn’t affect their tax status.

Matt Hutchinson, of spareroom.co.uk, said: “With no immediate signs of an upturn in the economy people are looking for ways to bolster their finances and, for many, the most effective way of doing this is to take in a lodger. When you consider the £4,250 you can earn tax free in a year from renting out a room it makes perfect sense – you’d need to rack up a lot of hours in a second job to earn anything like that.”

2. Short-term holiday letting

Edinburgh households could make more money in a month from renting out their home to holidaymakers for a week as they could from renting out a room for the long-term, research by Housetrip.com claims.

Inverness residents can make the same returns in just 4.8 nights on average, according to a report by the global holiday rentals firm, while landlords in the capital could make up to £26,000 more a year by switching from long-term room lets to short-term holiday rentals.

With private home rentals increasingly popular among holidaymakers, it argued that those with main or second homes in Scotland’s tourist towns and cities could make good money from short-term lets.

The Housetrip site has just over 3,000 UK properties listed as available to holidaymakers, including 124 in the Scottish capital.

Arnaud Bertrand, founder of HouseTrip.com, said: “Many investment property owners in the UK don’t realise just how much more money they could be making through short-term rentals rather than on a traditional long-term basis.”

3. Lights, camera…cash

Your home may be considered worthy of using as a location in a film, TV programme or advert, and it doesn’t need to be a grand  affair. Thousands of normal homes are used as locations every year, with hundreds of pounds a day on offer in return for giving your home over to a film crew for a period of time.

Agencies such as www.lavishlocations.com and www.amazingspace.co.uk will help give you an idea as to whether your home could be a viable locations, while the BBC locations department is another useful port of call (020 8576 8863).

Demand varies with area, but Edinburgh is particularly sought after by production companies that will pay between £500 and £2,000 a day to rent out the home they want.

4. Park and ride

Soaring fuel prices and rising car insurance premiums aren’t the only factors making commuting by car more expensive – parking facilities are also becoming dearer, forcing more drivers to consider alternatives.

One option that’s popped up is space rental, where homeowners rent out their garage or driveway as parking space. Websites such as www.yourparkingspace.co.uk/, www.parkatmyhouse.com and www.parkonmydrive.com put homeowners in touch with motorists who are on the lookout for a cheaper place to park in their area.

For example, yourparkingspace.co.uk currently has 48 sites available in Edinburgh, both in the City and the surroundings suburbs. Charges range from £10 to £30 a week, between £100 and £375 a month and from £150 to £1,200 a year.

But if you do rent out your driveway or garage, be sure to check with your insurer in case it affects any element of your home insurance. Letting someone use your garage may prove a sticking point for some insurers.

5.Holiday swaps

This, similarly to short-term letting, plays on growing demand for private holiday homes. Rather than letting out a second home or investment property to holidaymakers, however, you can slash the cost of your own holidays by joining the burgeoning home-swap movement.

Websites including www.lovehomeswap.com, www.geenee.com and www.intervac.com allow you to search for a home available to swap in your chosen destination, the deal being that you let out your own home in return.

Nearly two million Britons have home swapped and many now build their holidays around the locations where suitable exchanges are available.

The savings can be impressive, particularly for families, although it does require a degree of trust – the last thing you want to be greeted by on return from holiday is a home that’s been left a tip. However most websites include swapper ratings, giving you an idea of what other groups are like as guests.

Tips for making the best of a home swap include getting to know the other family first – exchanging with families of similar sizes and needs – and making sure you clarify in writing how the costs will be covered, from phone and utility bills to the fuel used if a car swap is included in the deal.