Launched by the government in the early 1990s, the Rent a Room scheme was praised as a way of helping to ease the shortage of affordable housing by encouraging householders to rent out a spare room in their home.
The incentive for householders – whether home owners or tenants (with the permission of their landlord, of course) – is a tax-free allowance. This has been steadily increased over the years, to reach a current tax-break worth £7,500 a year.
It might be described as a win-win situation, since the tenant or lodger gets cheaper accommodation than he might otherwise find, whilst the householder is able to earn a tidy sum in tax-free income.
Although there may be benefits for both, there are also risks – and these risks need to be covered by specialist rent a room insurance.
Here are some tips and suggestions to take into account:
Homeowners
- if you are a homeowner, check carefully any home building and contents insurance you may have;
- once you are letting even part of your home, a spare room let’s say, to a lodger – your home insurance may be compromised and the cover inadequate;
- rent a room insurance may restore the comprehensive cover you need both for the structure and fabric of the building and the contents you own;
- protecting your contents may be even more important when you have a lodger in your house, and some insurers may extend cover to any malicious damage caused by your paying guest or guests;
Tenant householders
- if you are a tenant, these extra precautions are equally relevant to safeguarding your possessions – your landlord’s own insurance policy is likely to continue to provide cover for the building (but that is one reason why you need to seek his permission before letting out a spare room);
- rent a room insurance may provide the protection you need for your own belongings in the house;
Lodgers
- if you are renting a room in someone else’s home, you might also want to spare a thought for safeguarding your possessions against theft, loss or damage;
- your possessions are your own responsibility, and their loss or damage is unlikely to be covered by your host’s insurance policy;
- once again, therefore, specialist rent a room insurance is likely to provide the solution you need;
How much cover do I need?
- if you are a homeowner or a tenant householder letting out a spare room, your rent a room insurance needs to cover the risk of loss or damage (including the possibility of malicious damage) to the entire contents of your home;
- to ensure that you are not underinsured – when the settlement of any claim may be insufficient to repair or replace lost or damaged possessions – it is important to prepare a detailed inventory on a room by room basis;
- the total value of all your possessions is then the amount of contents insurance you aim to cover;
- if you are the lodger and occupying just a spare room, of course, valuing your possessions is likely to be considerably easier – although you might again want to avoid the risk of underinsurance.
Rent a room insurance, therefore, may provide the solution for several different parties to ensure the protection of their possessions – whether you are a homeowner or tenant with a room to spare or the lodger occupying it.