Have you got any spare…rooms?

How would you fancy opening up one of your bedrooms to pay off your debts? You’d be by no means on your own with the line of thinking as record numbers of householders are doing so to pay off short term loans and other types of lending incurred over Christmas, according to one of the directors at spareroom.co.uk, Matt Hutchinson.

As the deadline to repay loans drew closer towards the end of the month for short term loans taken out to live a little over the 2011 festive season, details in one recent report suggest that 6,000 households who had a room going begging put it to use in January. As a comparison, for those who are a bit vague on how that figure compares with previous periods, it is a massive 83% up on December 2011 and more than a fifth up on the same month in 2011.

The report also suggests that the overall economic position is contributing to the growing trend. There are hundreds of thousands of couples who are struggling to get on the property ladder so for individuals wanting to fly the nest, with council waiting lists being given priority to non-UK patrons and little chance of raising a deposit on their own, there is a huge market for single room accommodation in private dwellings.

It is hardly a surprise that people are considering paying off short term loans and credit cards in this manner. The average income from renting out a single room clocks in at £398 per month. The closer you get to London, then that figure rises dramatically. A room in the capital will set you back, on average, £677 a month (that’s three times my first ever mortgage on a three-bed terraced, which wasn’t that long ago!).

This method of generating income has been well investigated by the government and HM Customs and Excise. There is an official ‘rent-a-room’ scheme with a tax-free threshold that householders can earn before having to pay tax, and it is quite generous. But with the average UK monthly rental at £398/month, if anyone has chosen this option as a quick cash injection, it would have to be declared as it just tops the tax-free limit of £4,250 per year.

Matt Hutchinson added that savvy householders have got the mood of the country just right by taking in lodgers. People have realised that, although inflation is rising as well as fuel duty and heating bills, which are not necessarily in the inflation figures that are touted in the media, wage rises, overtime and the opportunities for furtherance of careers are just not there to match the ever-increasing demands on the household budget. An extra £4,800 per room is a welcome buffer to put between you and your credit card, mortgage and instant cash loan commitments.

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