Homeowners listing spare rooms for rent help mortgage woes

More homeowners are offering their spare rooms or granny flats for rent to strangers to generate extra incomes in the face of rate rises.

A three-bedroom, one-bathroom house in Ipswich advertised to rent for $550 a week.

The spare room is gaining new life as owners open their homes to strangers to generate extra cash for mortgage repayments.

Rising cost of living pressure and 13 interest rate hikes in less than two years has coincided with a 38 per cent increase in the number of new rooms and granny flats being listed on Flatmates.com.au over the past year.

The rental portal’s community manager Claudia Conley said around half of people listing spaces in their property are homeowners and empty nesters.

“It is a reflection of the cost of living crisis, and the rate rises,” Ms Conley said.

“A lot of homeowners are looking at their spare room and they’re going, you know what, I could be renting that out and earning some additional money on the side.

“We also have a lot of older sharers, 65+ using Flatmates … for companionship.”

Tuesday’s Reserve Bank rate rise of 25 basis points took the cash rate to 4.35 per cent, with NAB the first major bank to pass the increase on in full. Mortgage brokerage Lendi estimates disposable income has halved from $1800 prior to rate rises to $900, with the average credit card balance sitting at $3000,

Flatmates.com.au community manager Claudia Conley.

Lendi chief operating officer, Sebastian Watkins, said the drop in income allows for “zero tolerance” to extra costs or bills.

“The psychological impacts of that are pretty scary, but also, as a lender, it puts that whole cohort of people right on the knife’s edge of arrears,” he said.

Mr Watkins noted that while renting a room won’t affect your loan in most cases, it’s “probably a good band aid solution, but it’s not addressing the cause” of mortgage stress.

The national average for a room advertised on Flatmates is $290 per week. Several capital cities have recorded growth of over 15 per cent from last year, including Sydney ($350p/w), Brisbane ($275p/w), Adelaide ($245p/w), Melbourne ($270p/w) and Perth ($265p/w).

The increase in listings has not been even, with some of the most sought after locations of Clovelly and Elizabeth Bay in Sydney and East Perth and Mosman Park in Perth showing zero availability.

Ms Conley said the number of room seekers has risen 15.6 per cent year-on-year due to cost of living pressure and soaring rents constraining budgets.

“Whilst we have seen an increase in property listings, which is fantastic to see, there still isn’t enough to keep up with the demand of people looking for a place to live,” she said.

“We’re really encouraging homeowners or empty nesters who are looking at their spare room to really think about it and list it out.”