New research from LV= details one of the side-effects of the recession, the dramatic increase in the number of people taking in lodgers to supplement their income.
LV= says that the number of people who now have lodgers has doubled in 2012 to reach almost one million.
The figures show that the sharp rise in inflation in the past few years caused by higher utility bills, fuel prices and food prices, coming at the same time as limited increases in salaries, has fuelled the need for households to take in lodgers to help cover the extra costs.
There are now 954,000 households that have taken in a lodger. The research also shows that ‘part-time’ lodgers have increased by 13 per cent. This includes lodgers who just stay during the week, often to work, and return to their homes at the weekend.
The research says that the main reason for the increase is to help keep household finances afloat and to help pay the mortgage.
John O'Roarke, managing director of LV= home insurance, said: "As people struggle to keep on top of their bills and mortgage payments, it makes sense to look for other sources of income. For homeowners that have a spare room, taking in a lodger can be a great way of getting in some extra cash.”
36 per cent of respondents said they rent out a room to help boost squeezed incomes and 28 per cent say they need the rental income to help pay the household bills.
15 per cent of people are using the extra money to help pay their mortgage and four per cent of people say that they need the extra money to help them make up for the cuts in benefit payments.
Some experts believe the trend is likely to continue as homeowners find it difficult to renegotiate to a competitive mortgage product and have to revert to their lenders standard variable mortgage rate.
Matt Hutchinson, director of SpareRoom.co.uk, said: "We expect to see increasing numbers of homeowners turning to renting out spare rooms as their fixed rate mortgage deals come to an end and they see their monthly mortgage payments rise substantially when they revert to their lender's SVR.”
Meanwhile, there is also increased demand for rental property as tenants and first-time buyers find it increasingly difficult to secure mortgage finance to buy their first property and get on the housing ladder.
That is the most common reason that lodgers themselves give as to why they rent a room, with 66 per cent saying they would buy a property of their own.
As home-ownership has become more and more unobtainable, so the average age of a lodger has risen. It has now reached 29 and six per cent of lodgers are aged between 45 and 54.
The incentives for homeowners to rent out a room are obvious. Under the government’s rent-a-room scheme homeowners can receive up to £4,250 tax free each year.
However, there are risks associated with taking in a lodger. 20 per cent of respondents said that their last lodger damaged their property in some way and nine per cent said that some of their possessions went missing.
Homeowners also need to be prepared to pay higher bills as often lodgers are not as careful about turning lights and appliances off, 22 per cent, according to the report. More than one in ten also said that security can be more of a risk with a lodger as some lodgers leave windows open or don’t lock doors properly.