PRESS RELEASE: A waste of space – Homeowners sitting on £791.bn in spare room value
Research from the game-changing property platform, Boomin, has revealed that the value of the nation’s spare rooms is estimated at at least £791.5bn, and that’s just those of us that admit to having two or more.
Boomin’s research found that 50% of us have one spare room within our homes. This spare space is currently valued at £42,000 per room in the current UK market, the equivalent value of 1.3 Bitcoins or just over the average annual London salary.
London is home to the most expensive spare room value at £76,476, followed by the South East (£54,346) and the East of England (£49,211). Even in the North East where this value is at its lowest, homeowners are still sitting on a spare room value to the tune of £21,881 per room.
However, statistics from the English Housing Survey by the Office for National Statistics show that 38% of homes in England are under-occupied – meaning they have two or more spare rooms. With 24.7m homes across England, that’s 9.4m homes boasting two or more rooms that are largely surplus to requirement.
Boomin estimates that, even at just two spare rooms in total, the current value of this spare space is a staggering £791.5bn – and that’s without counting those with just a single spare room.
London again ranks top where this total spare room value is concerned, with the capital accounting for an estimated £211.2bn worth of spare rooms value, with the South East (£1.65bn) and East of England (£102.2bn) also exceeding £100bn.
One way to get your spare room generating value rather than wasting it is via the government’s rent a room scheme. This allows you to generate rental income up to a maximum threshold of £7,500 per year without paying tax. That’s £625 per month in rent for a room you may otherwise rarely use.
Michael Bruce, CEO and Founder of Boomin, says:
“Many of us have a spare room and during the pandemic, they’ve been used as home gyms, offices, art studios and more, as we’ve tried to maintain some sense of normality both professionally and personally.
However, for many of us our spare room or rooms will generally sit untouched besides the odd visit from friends or family and they tend to double up as an overflow storage space for our old clothes, kids toys or other obsolete household items.
This is quite amazing when you consider that this underutilised space is worth over £40,000 per room and it certainly begs the question as to whether some homebuyers could save a considerable sum by being more realistic about how much space they actually need, compared to how much they would like.
Alternatively, the government’s rent a room scheme provides the potential to generate some additional income from your spare room and you could earn up to £625 a month tax-free.”
50% of homeowners admitting to having a spare room based on a survey of 1,053 current homeowners conducted by Boomin via consumer research platform, FindOutNow (12/01/22)
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Will government intervention be the only way to mend the housing market?
On average, it takes 28 weeks for a property to go from sale to completion. But why? Why is there such a long bumpy journey?
Well, it’s a complex process with many stakeholders involved and there are a lot of variable elements. Add in the need for finance and legal, and you have a lot going on.
But, if for decades we’ve had over one million completions on property and land over £40,000 (according to HMLR) can we not use this ‘groundhog’ knowledge and digitally transform the whole process?
Yes, it is complex, but with artificial intelligence and machine learning by 2017, software was better at looking at x-rays and predicting who was ill and who was not at a higher rate than clinical practitioners. So, if it can do that, then I am pretty sure it can leverage its digital neurological self to sort out the grindingly slow process of moving.
One way forward would be if we did digitally transform the whole process, mandated by the government.
Whilst I hate government intervention (e.g. Chancellors putting the housing market on steroids with stamp duty plays and creating boom and bust problems) the really sensible approach would be for all land or property to be disposed of to have a digitally available oversight pack.
With all the legals, plus all the data sets on the property or land, from survey (condition not price as a variable) to having finance available too – much like buying a car.
We are getting closer to this position. Lenders and banks are still in the stone age, but software is leap-frogging their old ways, and with the ability through the highly detailed data sets now common, it is possible to assess the property asset and the buyer through open banking, providing same day finance. Though it’s just not common practice yet.
The legal sector needs to realise its consumers are digital natives wanting to buy, sell and rent 24/7, so the typical 37.5 hours of legal practices are already often only open 22% of the time. A huge mismatch there.
However, as we move towards 2030 and commerce that thinks digital transformation is not going to eat their shorts needs to try and pay a cheque into a local bank which, as it happens, probably closed three years ago.
If you can buy a car online for £150,000 in the next hour, why does it take 28-weeks to buy a two-bed terrace in Newcastle for £56,000?
Because, to quote Simon Whale, “We have always done it this way.”
Take it from me, the 67% of the world’s population who are under 35 are doing it very much their way, and anyone who is slow, or digitally not in the game, will not be getting their money.
Agile businesses who understand the user experience will. There is a reason Amazon has a market cap of $1.7 trillion, it sells things digitally fast. Will it move into the real estate space? If it does, that next day delivery method will prove to be extremely popular, take it from me.