Olympic rentals let-down

Here an urban myth lodged in the brains of many Londoners that they will be able to make a fortune renting out their homes to Olympic Games visitors.

While there will undoubtedly be people desperate to find a place to stay in London during July and August, they are unlikely to want to part with £5,000 a week to sleep in a dingy Hackney flat.

And flat owners who can find tenants will have countless legal and bureaucratic hoops to jump through first.

'Try letting privately and you could get caught - reported by neighbours fed up with the noise and litter'

"There's been a lot of hype but the reality is that there is a lot of hassle involved and quite high costs, so it's not going to be for everyone," says Kate Eales, London lettings director at Hamptons International, which has just set up a dedicated sports let service to match short-term landlords with Games tenants.

Eales believes demand will centre on homes within half an hour of the Olympic Village and on a direct train line - think the City or Islington as well as Stratford itself.

Visitors planning a holiday set around the Games might prefer a more central location. Flats will be the most popular option - but for every bedroom you offer there needs to be a bathroom.

For a two-bedroom flat in Islington, which would normally rent at £500 a week, Eales estimates an Olympic rent of between £1,500 and £2,000 but the profit will be after the costs of becoming a part-time landlord.

Check where you live: some council's issuing £20,000 fines

Six councils (Southwark, Tower Hamlets, Islington, Kensington and Chelsea, Westminster and Camden) are so concerned about "pop-up" hotels during the Games they insist residents must apply for planning permission before letting their homes for less than 90 days. This could cost up to £400, and your chances of success are limited.

Westminster, which is particularly strict on the matter, is hiring four extra council officers to hunt down homeowners illicitly letting their properties, and the penalty for transgression is a fine of up to £20,000 and a criminal record.

The council's Rosemarie MacQueen says: "There is a growing economy of 'pop-up' hotels, with landlords buying up properties, then cramming people into them to make a quick profit.

"People in blocks of flats where owners are doing short-term lets say their quality of life has gone down. The visitors don't feel responsible for the property and there are constant problems of noise and litter."

If you want the convenience of organising your Olympic let through an agent you will have to pay higher than normal management fees: about 25 per cent of your rental income in some cases. You will also have to apply for a gas safety certificate (£70 to £80) and should get your electrical appliances tested (another £70 to £80). You must obtain permission from your insurer, your mortgage provider, and, if you live in a flat, the freeholder.

Top rents will be a tall order

If you want to receive a top rent, your home will have to be immaculate, with en suites throughout (with powerful showers) and you will probably have to hire a professional cleaner (from £200 for a one-bedroom flat) to look after the place daily.

Oh, and don't forget to ensure your furniture is fireproof and that you've made up a book of information about the local area. Even if you manage to let your home for two weeks for a total of £4,000, once the costs are subtracted you will be left with about £2,500 "profit" - which will be taxed - and you may well spend that finding somewhere to live yourself during the fortnight. The bottom line is that you won't be retiring on your proceeds.

There will, of course, be people who will ignore the rules and try to provide a let for cash. Eales suspects there will be a rash of "fly-by-night" agencies setting up to help homeowners find tenants (beware of badly designed websites with no contact numbers).

These will offer little in the way of support if you get caught - which is likely if your neighbours raise the alarm after a week of enduring noisy Olympic tourists. Expect to face the legal and financial penalties alone.

An easier option: rent a room

Having cast aside the dream of wads of money coming your way there is a more modest income to be made.

The Government's Rent a Room Scheme (direct.gov.uk) allows you to earn up to £4,250 a year tax free by letting out furnished rooms. The health and safety regulations don't apply and you don't need planning permission.

The scheme is open to homeowners and tenants (check your lease first), once you have cleared your plans with your mortgage lender and insurer. You have to remain in situ, which means being prepared to make breakfast and exchange small talk with a Canadian karate fanatic, but on the plus side you could charge them £2,000 a week for a two-week stay, and not fall foul of the scheme.