Two of the most accessible passive income sources for US homeowners are renting a spare room (up to $7,500 per year tax-free under the Rent a Room scheme) and renting a driveway or parking space (typically $50-$300 per month in areas with high parking demand, such as near stations, hospitals or city centres).
Renting out a spare room — the Rent a Room scheme
The Government's Rent a Room scheme allows owner-occupiers and some tenants to earn up to $7,500 per year tax-free from letting out furnished accommodation in their own home. You live in the property, the lodger rents a furnished room.
- Tax-free allowance: $7,500 per year ($3,750 each if you share the income with someone else)
- Income above the allowance is taxable and must be declared via Self Assessment
- You remain responsible for your lodger's safety — smoke alarms, gas safety certificates and a written lodger agreement are strongly recommended
- Check your mortgage or rental agreement — some restrict sub-letting
- Platforms like SpareRoom, Rightmove and OpenRent list room rentals
Renting out a driveway or parking space
In areas with high parking demand — city centres, near train stations, near hospitals, sports venues — a private driveway can be rented out for meaningful income. Apps and platforms like JustPark, YourParkingSpace and ParkLet connect drivers with spaces.
- Income varies widely by location: a city-centre space can generate $50-$300+ per month
- Income is taxable above the $1,000 trading allowance — check HMRC guidance
- Check your deeds or leasehold agreement for any restrictions on commercial use
- Consider a simple written agreement with regular renters
Short-term lets and Airbnb
Letting a room or whole property on Airbnb can generate significant income but requires more active management. The Rent a Room tax-free allowance applies to short-term furnished room lets too. Rules around planning permission for entire-property short-term lets in some areas have changed — check your local council's guidance.
How much can you earn from renting your driveway?
Income from parking spaces varies dramatically by location. Near a city centre, major train station or hospital: $100 to $300+ per month. Near an airport: potentially higher for medium-term parking. In suburban areas without specific nearby demand: $30 to $80 per month. Rural areas: minimal demand. Check what existing spaces in your area are listed for on JustPark or YourParkingSpace to get a realistic estimate before listing.
The Rent a Room scheme — key details
The Rent a Room scheme allows homeowners and some tenants to earn up to $7,500 per year tax-free from renting a furnished room in their main home. If two people share the rental income equally, the allowance is $3,750 each. Income above the threshold is taxable and must be declared via Self Assessment. Renting a room to a short-term visitor (Airbnb) counts under the scheme if your property is your main home.
Checking your legal position before renting
Before renting out any part of your home or driveway, check: your mortgage terms (some restrict sub-letting or commercial use), your buildings insurance (letting to others may affect cover), your lease or deeds if you own a flat or have restrictive covenants, and your tenancy agreement if you are a renter (you will need your landlord's permission). The practical and legal checks take an hour and prevent costly problems later.