There are lots of reasons for wanting a garden house. Perhaps the most common need is for some extra space, but what that looks like can vary.

Some people need an extra study or library, a a breathing space to retreat to. Others need a guest house for relatives and friends to sleep in when they come and visit, or even a home for their son or daughter who's getting a bit too old to live with their parents, but has nowhere else to go.

You might also have several different needs for the same garden house, perhaps at different times. The house will be there for decades, so at some point you might not even need it at all. That's when it's a great idea to rent it out and get a passive income every month. It also gives the owner some protection against inflation - the higher the prices in society are as a whole, the higher the rent you can charge.

A garden house on your land increases the value of your property as a whole. If it also provides a continuous income, it can be a very good deal. This comes at a time when many people are looking for alternative investments instead of putting their hard-earned cash into the stock market and keeping their fingers crossed that it will give a good return. Investing in real estate has historically proved to be one of the options that, despite low risk, has had the best economic growth.

This was one of the ideas when the Attefall reform was introduced in Sweden - that the housing shortage would be fixed by making it possible for homeowners to set up an extra house without all the bureaucracy. The regulations stipulated a house that was a little bigger than a garden room and could be lived in more permanently. This made it ideal for young people, students and singles to get somewhere to live without great expense or long periods waiting in the Swedish housing queue.

There are, however, some things worth keeping in mind before renting out your garden house. We've compiled a list for you below.

Find out who's going to rent your property
The best solution is to find a tenant you know or with whom you at least have mutual friends. No matter how safe and secure it feels, it's a good idea to make sure they have references. Don't settle for references on their own - obtain a credit report if possible, and make sure the person is able to pay the rent.

Have a look on the internet and social media as well. People post surprisingly private information about themselves on Facebook, Instagram, Twitter and Youtube. Look at this overall picture of your potential tenant and ask yourself if this is a person you want to do business with and also have as your closest neighbour.

Write a contract
Writing a contract isn't about a lack of trust, but about avoiding situations where you're trying to remember what you have and haven't said. Also, verbal agreements can be understood differently depending on the tone of voice etc. Writing down what has been agreed upon and signing it with names and dates provides security for everyone involved.

The contract should contain information about the rent, notice period, the tenant's and landlord's rights and obligations and what happens if something breaks. It's a good idea to write a list of the items that are included, even if you rent it out completely unfurnished. There are templates online and it's not difficult at all for people without legal training to complete these documents.

Always ask for a deposit
Rent is usually paid monthly. No matter what time interval you have settled on, you should always require payment of a deposit in advance. If you don't, you’ll soon end up in a situation where you have trouble getting the rent on time, and if the tenant leaves the home without first having paid a deposit, there's little chance for you to ever get the money.

In addition to the rent, you can also choose to take out a deposit for unforeseen events, for example to protect yourself against costs of negligence or damage on the part of the tenant.

The amount of rent you can charge may be affected by local guidelines or regulations for renting out property.

Don't forget the tax
You need to check where to declare your rental income when filing out your tax return. If you’re unsure of what applies, check your local government website.