Get Rich…with Lodgers

big-bang-theory-takeaway-main-ac41I’ve noticed that in the street where I live, several of the houses have only one or two people living in them.

Usually, these are older people whose children who have left. They’re left rattling around in a detached family house that is expensive to maintain. Sometimes they live alone in their old family house for years. It looks a bit sad and lonely to be honest.

Why don’t they move? Could be many reasons but I’d guess a big factor is habit. Many older people seem to get stuck in their daily routine and, over time, become scared of change. They also seem terrified of crime…especially crime by young people. Which is ironic as most young people aren’t very scary. To be honest, most young people look to me like they could do with hardening the fuck up.

With a bit of calm and perspective, you realise that many (most?) of the crises promoted reported by The News are problems that could be solved, often quite easily.  Here are 3 crises that we hear a lot about:

1) The Pensions Crisis – people don’t have enough in their pensions;

2) The Social Isolation Crisis – a lot of people (especially older people) are living alone / lonely / socially isolated; and

3) The Housing Crisis – there’s a housing shortage so house prices and rents are too high.

Hhhhmmmm. If only there were some solutions for these seemingly intractable problems…

Moving on to a completely unrelated topic, this week I’ve got a reader to explain an advanced investment technique which has greatly accelerated their progress towards financial freedom.

It’s called: “having a lodger” and it works by sweating an otherwise under-utilised asset…your house.

If you rent out a room for an income of £10,000 per year, that’s like having an extra £1,000,000 in a bank account earning 1% interest. It’s quite hard to save a million pounds. It’s a lot easier to rent a room out.  It’s socially useful and environmentally friendly. And it might even be fun 🙂


The Escape Artist

Who’s that stranger in my house?  Is it a burglar ready to steal my stash of oats which were on offer at Costco?

No, it’s Phil, my lodger, who’s accelerated my journey to financial independence by over 5 years.

Lodger?! – I hear you say. The very idea of a stranger living in your home may create a sense of fear and panic that often results in the very idea being thrown out the window untried, but just hear me out for the moment and let me share my experiences with you.

We’re a married couple, fortunate enough to live in a 4-bedroom family home.

It is estimated that half of all owned homes are ‘under-occupied’, that’s 7.3 million households with two or more empty bedrooms across the UK, an insane amount of spare capacity for housing which is otherwise ‘dead space’ or heaven forbid ‘storage’ space for all the shit consumer products you never use.

So, you can do your bit to alleviate the current housing crisis in the UK and provide living space to those who are economically active.

Before you think I’m getting all evangelical, there are financial benefits to you, of course. You can command a market rent for your room which provides a stable income stream contributing towards your freedom fund.

I don’t often praise the Government, but, in this case, they’re on your side too and have what is known as The Rent a Room Scheme which lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This means you could let your room for £625 a month, income in your pocket which is completely tax free! Apart from the tax breaks, another major advantage is you do not need to go to court to evict tenants if they don’t pay the rent.

I’m in the very fortunate position to have two free rooms in my home which means I receive £1,500 a month. That’s significant wonga to go towards your living costs or in our case (ahem, most likely your case too) towards a FI stash.

So what’s the catch? Or more appropriately, what does having a lodger mean?


Finding a lodger can be an interesting experience but there are many ways to help make it relatively painless.

There are websites such as:

or just good old fashioned local shop ads. You could also use Facebook to get recommendations from friends and family of people looking for somewhere to rent.

We met our current lodger from a friend up in Manchester who mentioned he had an old school friend moving south looking for somewhere to stay – perfect! But remember to always do a credit/reference check when you’re vetting a perspective lodger, even if it is a recommendation from a friend.

Once you take in a lodger, you become a live in landlord and there are responsibilities which you pick up along the way, namely:
• Permission to take a lodger in (if you’re in a flat/leasehold property)
• Getting all gas related equipment checked and certified
• Providing furniture which meets fire safety rules
• Create a written tenancy agreement (not as strenuous as a typical tenancy agreement when letting a property).

A lot of these are straightforward administrative areas which can be done with relative ease. I’d recommend signing up to the Guild of Residential Landlords which provides all the documentation, referencing services and phone support you could require when becoming a live in landlord. It also provides accreditation and the annual membership cost can be offset against your rental income.


So, you’re leveraging your home as an asset to provide additional income – great work!
You’ll most likely need to make sure you declare this income accordingly in your self-assessment.

You can find out more on the HMRC website whether or not you need to do this. You may want the help of an accountant to make sure your self-assessments are filed correctly… in most instances this expense can also be offset against your taxable income.

Having another person in your home will mean more expenses in terms of utilities etc. Based on experience of single let properties and Houses of Multiple Occupation (HMOs) which will be reserved for another post, you can very generously estimate £50 per month per person increase to household running costs (FYI – mine have never gotten this high).

Day to Day

This is usually the most important bit for people – what is it like to have a lodger in your property? Surprisingly pleasant is the answer!

Many people have said to me: “why would you take strangers in your home? I would never have a stranger in my home?”

This is, I think, rooted in fear. “Strangers” is a scary word, signifying the unknown, but the funny thing is, once you speak to someone, they’re no longer strangers. You find common ground, common interests and friendship.

That’s exactly what I’ve found from having 3 lodgers over the past three months. They’ve all been normal working folk, looking to get on with life, progressing their careers and saving money whilst doing so. That’s where the most interesting thing is, every lodger I’ve met already has the ‘FI mind-set’.

Why? Well, they’ve decided to rent a room rather than a 1 bedroom or studio apartment for nearly double the cost. Without realising it, all of a sudden you have a FI buddy 🙂

It really can be a great experience if you find the right person, they end up more often than not being a friend to watch your latest TV series / sports with and potentially someone to help around the house with cleaning/gardening. I’ve been a live in landlord now for just over a year and it has really added more social interaction to my life (alongside the extra income).

Downsides? Not really downsides but some things you should consider:

• Alongside renting your room, lodgers will share a kitchen, potentially a bathroom and your living space. Be clear on boundaries and timings, this just helps to create a positive living environment. We decided to invest in a small additional fridge to avoid the ‘who finished all my milk!’ scenario.

• Alongside the formal vetting/referencing process, make sure you sit down with your prospective lodger over a coffee or beverage of your choice and make sure you’re comfortable living with this person and that you get on, on a social basis.

I would say always follow your gut feel. We interviewed 5 people before finding our first prospective lodger. Each individual’s circumstances will be different, whether you’re a newly married couple, single female, couple with small children etc.

Having lodgers is one of our biggest ‘side hustles’ and provides huge social value which we never realised until having our first lodger.

Future FI Landlord

Further reading:


Financial coaching

And finally…I did a podcast interview with the Financial Independence Europe podcast:

FI Europe podcast


  1. fatbritabroad · · Reply

    I do this with a loose work friend. It works well for both of us. He gets well below market rent (350 a month) as i dont like profiting too much out of friends and I get valuable extra income.

    I didn’t realise I had to declare the income if I was under the threshold however or that I can offset the increased housing costs, useful info

    1. Future FI Landlord · · Reply

      Good to hear – it’s always a nice scenario to be able to support a friend/family member.

  2. I started doing this over a year ago when a friend had a life emergency and needed a place to stay while figuring out her next step. It went very smoothly for the 3 months. Then another friend had a friend that needed a room for 1-2 weeks a month. That went great. Then I rented the spare bedroom out to someone from another country for a month. Now I’ve got someone for a year that is doing a fellowship in my city. It is great to have the extra money (hello maxing out retirement!). Plus, I get help keeping the kitchen clean and letting out my dog on days I need to run errands after work. We have some interaction but basically, they live their life and I live mine. It’s been great.

    1. Future FI Landlord · · Reply

      Nice! I’ve been able to meet so many interesting people as a result of taking in Lodgers, but as you said its nice to have the social interaction but you also get to carry on with your life with little to no impact on day to day arrangements

      1. I did something similar when working on a contract. The customer was far sighted enough to devote a page to rentals on their intranet. I ended up paying significantly less than the cheapest motel rates, and the landlord had the run of the house to himself over the weekend when he had custody of his daughter. Bonus for me was avoiding those “Tuesdays after a Bank Holiday Monday” when commuting traffic is notoriously bad; I’d drive up late the night before. The landlord was also often away all week on business, so having someone on hand in the event of any burst pipes, etc. was a comfort. Win-win all round.

  3. The government tax free scheme is interesting! I wish we had a similar scheme in Australia. So many big family homes here with baby boomers living alone now the kids have moved out.

  4. I’ve just started renting a room from a colleague from another team. I stay (and pay) by the night. I stay when I have 2 or more shifts in a row. My commute is 92 miles to work (and 92 back) on top of a 12.5 hour shift it makes for a long day. Staying over cuts down the time spent travelling each week.

    It seems to work well- I’m only there 3 nights/ days per week and each day is saving me time and money as my rent is less than my fuel costs. I have peace of mind/ less travel and my landlady has a bit extra cash each month.

    I can stay back at work to finish off paperwork/ tasks without thinking oh heck I’ve got to drive home and when I finish my shift by the time I arrive at the lodgings children are in bed so I don’t interfere with the family life, and I’m up and on my way out as they get up to get ready for school.

    1. Future FI Landlord · · Reply

      A very creative/enterprising arrangement. I never considered it from a work perspective point of view but it goes to show the solutions you can come up with when you break down certain social conceptions of your home.

  5. Ian Mclaren · · Reply

    I think it ideal, depends on the circumstances of both parties, my view (as lodger) is less driver stress/ wear and tear on body, mind and car, landlady view is easy income from someone police checked for their job and only looking for no frills accommodation, not expecting breakfast/ evening meal.

  6. I stretched for a 2 bed flat when i first bought specifically so I could rent out the spare room. Mind you, this was about 1997 so stretched meant an extra £15k on the mortgage. Not sure how/if the figures would work now. Did it for 10 years and it paid off my mortgage. I was also best man to my first lodger and we go camping with our families every summer so there are potentially lots of extra benefits.

    I also had to ask one psycho girl to leave after 6 weeks, but that was my poor judgement.

    Didn’t bother with credit checks or anything. Just went with my gut instinct. Maybe a good idea these days, who knows.

  7. Great post. My husband and I have always has lodgers and it is a great source of income but there are numerous other benefits above and beyond extra income. The more people living in a house is more energy efficient and lowers the environmental impact of heating/lighting a house. I travel a lot for my job and it is great security to have someone in the house when I am away. I also did not know that I had to declare it if it is under £7500!! Better speak to the accountant about that.

  8. I rent my spare rooms out to students. I highly recommend this.

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