With many people trying to save money and reduce spending in the wake of the Coronavirus pandemic, becoming a live-in flatshare landlord could be one of the quickest ways to cut the costs of living, even resulting in a ‘rent-free’ situation for some.
Some studies have revealed that residents use over 70% of their income on household spending alone. When trying to save money, dedicating such a large proportion of wages to simply living means that there is often very little left over for the savings post. Flatshare expert Gian Paolo Aliatis suggests that it is entirely possible to completely cover that 70% income send ‘plus more’ through becoming a live-in flatshare landlord.
Gian himself followed this very idea after he graduated from university. He began subletting the rooms in a flat in Barcelona to help cover the costs of his own rent. He ended up not only living there rent free, but looking to sublet other properties too. His successes led him to continue with this approach over several years and he was able to build up a portfolio of over 180 properties, housing well over a thousand tenants.
Reflecting on his success, Gian explains:
“Renting your spare room or becoming a ‘live-in flatshare landlord’ could bring your housing costs to zero. Although it comes with its own responsibilities and challenges, a well-established flatshare operation can become also a source of friends or somehow replace that family that may live far away. Live-in flatshare landlords don’t necessarily need to give up their jobs, hobbies or friends; and neither have to sacrifice life’s essentials or holidays. It is the easiest and most effective way to save time and money and reduce that financial pressure that everyone is feeling right now.”
Becoming a live-in landlord may certainly seem like an easy option, but there are a number of key considerations to factor in before you take the leap for the first time. The most important thing is that if you are renting, you need to check that your leasing agreement permits you to sublet other rooms. Some landlords will not allow this and so you could end up breaching the terms of your tenancy if you proceed without appropriate consent. This could even lead to an eviction if the landlord decides to terminate your agreement. Others however, are much more lenient and providing you follow the rules, will allow you to sublet.
It is also vital to understand what your legal responsibilities and obligations will be, as you will effectively take the place of the landlord. This may include tenancy agreements, insurances and other factors to ensure you remain compliant with local laws. Always do your research before embarking on a subletting arrangement to ensure you know exactly what is required of you before you get started.
Any payments you receive as rental will be classed as additional income and so it is worth looking into the financial implications of increasing your income in this way. As you’ll likely still be working, you need to fully understand if there will be any other impacts on your salary band increasing, such as additional tax payments, decreases in other benefits you currently receive etc.
There is also a very personal aspect to becoming a live-in landlord that is not experienced when you do not reside at the same property as your tenant. You will be living day in and out with this person and so it will be important that you get on with them and have a good rapport; there is nothing worse than a tense atmosphere, especially when you are sharing the same space for an extended period of time. Seeking out a tenant who perhaps has a similar profession or interests as you would be helpful in finding a suitable candidate.
Whilst it is natural to want to get on with your tenant, in any sub-letting situation it is also vital to remember that it is a professional arrangement and so some distance should be kept. If things become too friendly, then when potential issues arise, such as late rent payments, it becomes much harder to enforce measures when the relationship has become too close. Unfortunately in all letting situations, there is a risk of problems and issues occurring, so making sure you are fully prepared for such events and have not jeopardized your position as landlord is vital to keeping things running smoothly.
If you have space in your property, becoming a live-in landlord could help to generate a valuable second income which can be used to support any losses caused by the pandemic, but also as a way of saving so that you are better prepared for any unexpected situations which may occur in the future. What is certainly evident from the Coronavirus outbreak is that we all need to be much more mindful of expecting the unexpected.