Britain’s sharing economy is booming as more and more of us rent cars, holiday homes, and parking spaces from each other. New research from Lloyds Bank reveals that 33% of us used sharing economy services during the past year.
It is an economy that is still new to many of us but as a nation we are becoming increasingly confident in the power of sharing our belongings in order to make some extra cash.
“The growth in the sharing economy offers homeowners a great opportunity to make extra cash from their homes and possessions, while those renting them can save a few pounds too,” says Tim Downes, senior claims manager at Lloyds Bank Insurance.
The most popular thing we rent is a holiday lets with 27% of us choosing to rent when it is time for a holiday.
Here are the top sharing services:
- Short-term holiday lets – 27%
- Car or other vehicle – 18%
- Long-term rentals – 14%
- Parking space or driveway – 12%
- Time or services – 10%
As well as using the sharing economy to get our hands on good value holiday accommodation or a parking space near work, many of us are also choosing to let out our own belongings in order to boost our income.
Nearly a fifth of men are earning money from renting out items such as DIY tools (17%) or lawnmowers (13%), compared to only 9% of women (DIY tools 9%, lawnmowers 9%).
How much can you earn?
The average annual earnings from renting out accommodation is £411, according to Lloyds Bank, with renting out a car making an average £118 a year.
Those renting out property are so confident of the potential to make money 22% of them are now making adaptations to their home in order to rent them out and 22% have purchased items with the sole intention of renting them out.
“Participation in the sharing economy shows no signs of slowing, and it’s easy to see why – it offers consumers cheaper, more flexible alternatives to traditional business models, while providing an opportunity to generate income from underused assets,” says Anthony Eskinazi, founder and CEO of JustPark.
“For example, we connect over a million drivers with thousands of underused parking spaces across the UK – helping motorists find a better deal on their parking, while allowing property owners to maximise the value of their spare land.”
Earning extra cash and tax
When asked why they choose to rent items rather than buy 47% said it was in order to save money, while a quarter of people said they enjoy the flexibility it gives them.
A fifth of people said they chose to rent due to a ‘waste not want not’ mentality – they did not want to buy items only to use them once. Additionally, 16% said they embraced the sharing economy because they think it has a positive impact on the environment.
Right now the extra income you earn from renting out your belongings is taxable. However, from April 2017 a new 'Sharing Economy allowance' will be introduced, which will allow you to earn up to £2,000 tax-free.
At the moment if you are renting a room out to a lodger in your home you could benefit from the Rent a Room scheme which allows you to earn £7,500 tax-free a year.
Find out more in: Earn tax-free income through ISAs, cashback, Government allowances and more.
Insurance concerns
While plenty of us are enjoying the financial benefits of renting out our belongings we haven’t considered how safe our stuff is. Over half of people who rent out their belongings, car or accommodation don’t know if they are insured.
“The flipside of the benefits of a sharing economy is that so many have turned a blind eye to insuring their valuable, ‘money-making’ possessions should they become damaged or stolen,” says Downes. “Anyone planning to rent out their homes, valuables, or a spare room should notify their insurer beforehand or they may risk invalidating a future claim.”
You should also consider what would happen if the item you are renting out has the potential to cause an accident or injure someone – for example if you are hiring out your lawnmower or power drill.
“We would not recommend renting out potentially dangerous items such as garden tools, unless the owners had the right type of insurance in place to cover for accidents and injuries that may result. If in any doubt, speak to your insurer,” says Downes.
Earn 5% from your current account