Q. My wife and I have recently retired and are claiming our social welfare pensions. We are finding it hard going with the drop in income from work and, to be honest, it can be a struggle to make ends meet sometimes. We have a spare room and wonder how would we fare out if we were to rent it out. Would it affect our pensions? Would we be liable for tax? Would it be hard to get the tenant out if things don’t work out?
Good question, and thanks for writing in. I am sure there are lots of people in similar situations wondering the same thing in today’s economic climate.
If you are getting a means-tested weekly social assistance payment, you can get up to €14,000 per year for renting out a room in your own home without it affecting your social welfare payment. Taxwise you can claim the rent-a-room relief. This allows you to earn up to €14,000 per year in rent tax-free if you rent out a room in your home to private tenants.
There are additional rules for the rent-a-room relief if you are a local authority tenant renting a room to a student or if you are renting a room to someone in receipt of HAP.
If the part of your home that you rent out is not self-contained, you are not covered by landlord and tenant legislation, so the rights and responsibilities under that legislation do not apply to you. For example, you do not have to register as a landlord with the RTB and the accommodation does not need to meet any minimum physical standards.
A person renting a room in your home is living there under a ‘license agreement’, not a tenancy agreement. This means that they are only entitled to reasonable notice if you decide to terminate the agreement. However, they can refer disputes under the Small Claims Procedure if there is a disagreement or issue.
Before you rent out a room in your home, you and the person renting the room should agree some ground rules and put them in writing. If you both sign and keep a copy of this agreement, you can refer to it if there is a disagreement.
Some important things to consider include: how long is the licence arrangement going to last; how much rent will be paid and how often; how will rent be paid, in cash, by cheque, or standing order; how are utility bills divided between you; can the person have visitors to stay overnight; and are there any restrictions about noise levels?
I am sure you will have no problem finding people to rent the room. It is customary nowadays to ask for a reference and to take a deposit before they move in.
