The cities where you can make the most from renting out your home
The upkeep of owning your own home is becoming less affordable in the UK, prompting many homeowners to seek new sources of income. More people are now renting out spare rooms, their driveway for parking spaces and for some people who can, their entire home to cover property expenses and earn extra money. But in which UK city can homeowners make the most money by renting out different parts of their home?
To help those considering this option, our home insurance team have researched the most profitable UK cities for renting out parts of their property. Our study covers rental costs for parking spaces, a single room, and three-bedroom properties in each city. We've also included tips for those homeowners who are considering letting out their property.
The most profitable cities in the UK to rent out a parking space
| Rank | City | The average price of a parking space (per month) | Average price of a parking space (per year) |
| 1 | Portsmouth | £241 | £2,887 |
| 2 | London | £186 | £2,236 |
| 3 | Coventry | £184 | £2,204 |
| 4 | York | £168 | £2,016 |
| 5 | Wolverhampton | £156 | £1,873 |
| 6 | Plymouth | £137 | £1,640 |
| 7 | Bristol | £135 | £1,621 |
| 8 | Doncaster | £130 | £1,557 |
| 9 | Stoke-on-Trent | £126 | £1,512 |
| 10 | Preston | £124 | £1,482 |
1. Portsmouth
Claiming first place is the coastal city of Portsmouth.1 As a popular seaside location, costs for parking spaces are higher than other cities in the UK, so homeowners with an unused parking space could be earning a significant amount of extra income by renting it out.
On average, a parking space costs £241 per month to rent here, annually amounting to £2,887 in extra income – the most profit of any city in our study.
2. London
England’s capital is well-known for its limited parking, meaning many drivers could be willing to pay a higher price for a regular space in the city. According to our research, homeowners who take advantage of this opportunity are making an average of £186 per month, adding up to £2,236 of extra income per year.
3. Coventry
Following just behind London in third place is Coventry. It costs an average of £184 per month to rent a parking space here, amounting to a potential £2,204 in extra income per year for homeowners who decide to do this.
We also explored the least profitable areas of the UK to rent out a parking space. Cambridge is the least profitable city, with parking spaces costing £61 a month on average, this could be due to the high number of cyclists in the city, reducing the need for car parking spaces. Derby is the second least profitable, with homeowners charging an average of £79 per month to park in a rented space.
The most profitable cities in the UK to rent out a room in your house
| Rank | City | Average price of a room (per month) | Average price of a room (per year) |
| 1 | London | £909 | £10,906 |
| 2 | Cambridge | £825 | £9,900 |
| 3 | Leicester | £724 | £8,688 |
| 4 | Milton Keynes | £718 | £8,618 |
| 5 | Oxford | £706 | £8,476 |
| 6 | Bristol | £703 | £8,436 |
| 7 | Manchester | £665 | £7,985 |
| 8 | Portsmouth | £654 | £7,850 |
| 9 | Norwich | £625 | £7,494 |
| 10 | York | £619 | £7,428 |
1. London
Unsurprisingly, London tops the list as the most profitable place for homeowners to rent out a single room. Tenants are paying £909 per month on average to rent a room in the fast-paced capital. For resident landlords, that’s an additional income of £10,906 per year.
2. Cambridge
In second place, and the most profitable city outside of London to rent out a room, is Cambridge. Homeowners here charge tenants an average of £825 per month or £9,900 per year. Situated near London, Cambridge is a popular commuter city, potentially attracting employees who need accommodation. Additionally, the high number of students at Cambridge University may create a strong demand for rental rooms.
3. Leicester
In third place is Leicester, with an average profit of £724 per month for homeowners renting out a room. That’s an average of £8,688 profit per year.
At the other end of the scale, Kingston upon Hull is the least profitable place in the UK to rent out a room. Homeowners here are charging £482 per month for a room here, equivalent to £5,789 annually. Following Kingston upon Hull is Liverpool, with homeowners charging an average of £486 per month for a room – or £5,831 per year.
The most profitable cities in the UK to rent out your home
While renting out your entire home isn’t an option for everyone, for those who are able, it can be a great way of bringing in extra income.
| Rank | City | Average price of a 3-bed property (per month) | Average price of a 3-bed property (per year) |
| 1 | London | £5,996 | £71,952 |
| 2 | Cambridge | £2,448 | £29,370 |
| 3 | Oxford | £2,413 | £28,959 |
| 4 | Bristol | £1,845 | £22,135 |
| 5 | York | £1,773 | £21,271 |
| 6 | Southend-on-Sea | £1,745 | £20,940 |
| 7 | Manchester | £1,635 | £19,622 |
| 8 | Milton Keynes | £1,569 | £18,826 |
| 9 | Portsmouth | £1,520 | £18,235 |
| 10 | Leeds | £1,515 | £18,185 |
1. London
London tops the list once again, with landlords receiving around £5,996 per month from renting out a three-bedroom property. That amounts to a staggering £71,952 per year in added income. And with the UK average salary at around £34,963[1] per year, some landlords in the city may be making around £37,000 more annually than those on an average salary.
2. Cambridge
Cambridge takes second place again, costing £2,448 per month to rent a three-bedroom property, or £29,370 annually. Though the city takes second place as the most profitable, landlords here are still taking in an average of £42,582 less each year than those renting out properties in London.
3. Oxford
Taking third place is Oxford, costing slightly less than Cambridge, at £2,413 per month, amounting to £28,959 per year.
At the other end of the scale, Kingston upon Hull is the least profitable area of the UK to rent out a three-bedroom home, costing £761 per month and £9,127 per year. Doncaster is the second-least profitable location in the UK, costing £849 for a month’s rent and £10,183 per year.
Top tips for renting out parts of your home
It’s no doubt that renting out a property, room, or parking space is a different way to boost your income. However, if you are planning on renting your property, taking in a lodger is a big decision. It’s important to take your time and carry out enough research beforehand. If you’re thinking about renting out a parking space, a room, or an entire property, we have some top tips to help you get started.
1. Check for ‘right to rent’
In England and Wales, you’ll need to confirm that your tenant has the right to rent in your home if renting an entire property or a room.
If you’re a renter yourself and thinking of letting a parking space, check with your landlord first as doing this might go against your tenancy contract. If you’re a homeowner, you should check with your mortgage lender to make sure you’re allowed to rent out a room.
2. Provide your tenant with full contact details
You’ll need to provide your tenant with your full name, address and contact details as well as an energy performance and gas safety certificate.
3. Make sure your property is ‘fit to live in’
Ensure your property meets all health and safety standards including that the gas equipment is inspected annually, electrical items are safe to use, and smoke alarms are fitted on every floor of your property. Address any necessary repairs, such as fixing leaks or faulty wiring, and make sure the property is clean and well-maintained. This will not only attract tenants but also ensure compliance with legal requirements for habitable living conditions.
4. Ensure proper home insurance coverage
Before renting out parts of your home, be sure to inform your insurer about your rental plans, whether it's a room, a property, or a parking space.
You should confirm that you have accidental damage cover, protecting you against tenant-related incidents and potential property damage. Failing to update your policy could result in denied claims or insufficient coverage.
Also if you’re renting out a parking space, you should work up a contract with the renter to ensure you are not liable for any damage to a person’s car on your property.
5. Rent a Room scheme
If you’re looking to rent out a room in your home, by signing up for the Rent a Room scheme, you can benefit from up to £7,500 tax-free income. This is available to both homeowners and renters. If the amount you earn is more than the threshold (£7,500) you should complete a tax return.
Methodology
Using a seed list of the top 33 most populated UK cities, we gathered the average monthly and annual prices for renting a parking space, a bedroom and a three-bedroom property in each city.
The prices were found using the following sources:
- The average price of a parking space - Parklet.co.uk
- The average price of a room - Spareroom.co.uk
- The average price of a three-bedroom property - Zoopla.co.uk
We then ranked these from highest to lowest to reveal which locations are the most profitable to rent out different parts of a property.
1) Looking at locations within a five-mile radius of the city centre, we took an average for the cost of renting out a parking space in each city.
[1] https://www.statista.com/statistics/416139/full-time-annual-salary-in-the-uk-by-region/
Anna McEntee - Insurance expert
Anna’s all about delivering fantastic insurance products at a great price. Value is the most important thing for Anna, as she cuts through the jargon and finds what’s most important and worth your hard-earned money.
