‘Grandlords’ are the new entrants to the rental markets Not many years ago, people assumed that retirement would bring a rest from worry, work and (hopefully) financial woes. That now appears to be nothing more than a dream for many, and one in seven pensioners is considering taking in a lodger to help pay the bills. And so another new word has emerged into our language - ‘Grandlords’: those who are in retirement and using their homes as a source of additional income.
It is a sad fact that nearly half of retirees are struggling to live off their pension and up to 15% of retired homeowners are looking to rent out a room to boost their income. The biggest move towards this trend has been seen in London with 20% of homeowners saying they felt they had no choice but to rent out a room.
A recent survey showed that more than half of the people questioned did not understand their responsibilities when becoming a landlord, or the type of insurance they would require. There are sorts of legal obligations which must be considered when letting out a room: for example, there are income tax implications for landlords. Under the government scheme of ‘Rent a Room’ you can earn up to £4,250 a year tax-free by letting out a room, which equates to a total of £354 a month in rent. If you exceed that you must fill out a self-assessment tax form and pay income tax.
In terms of insurance, having a lodger can particularly affect your contents insurance should you ever have to make a claim, so be careful with this. Here we offer a little check list of things you need to consider before attaining the title of ‘Grandlord’!
Sharing your home with a complete stranger is always a daunting prospect, although some welcome the company. The main thing is to make sure you are at ease with the person you are welcoming under your roof and to make sure you are protected legally. If you have any concerns regarding insurance, just pick up the phone to our friendly and professional team at Westhill Insurance Services. We will be delighted to offer practical advice and help with your insurance concerns and will make sure you receive polite and helpful guidance. That way you can ensure you enjoy your role as Grandlord knowing that your property is protected and, from the insurance perspective, that you are operating within sensible guidelines.
(Note: This article assumes that the property has no mortgage, if there is a mortgage in place, be sure to call your mortgage company to ensure they are aware you are letting a room as this may affect the terms and conditions of your mortgage agreement)