Websites such as Airbnb.com and Wimdu.co.uk allow "hosts" to advertise spare space on a nightly basis for travellers and guests. The space can be anything from a futon in the living room to a self-contained flat but most hosts typically rent out a spare bedroom.
Airbnb.com describes itself as a "community marketplace for unique spaces" and is positioned somewhere between hotels and couch-surfing. The site was set up by Joe Gebbia, Brian Chesky and Nathan Blecharczyk in San Francisco in 2007. The trio let their loft apartment to delegates at a conference when all the hotels in the city were booked up. The visitors slept on air mattresses, hence the website name.
What began with three guys and a few airbeds now offers accommodation in more than 16,000 cities in 186 countries. To date more than two million nights' accommodation has been booked via the site.
Rival Wimdu works in a similar way. It was set up in Germany in March 2011 and opened a UK office in May 2011. The site has got off to a flying start and in June secured £80m in funding from venture capitalists, the Samwer brothers. Wimdu now has 35,000 properties in more than 100 cities across the world. Its slogan "travel like a local" highlights the facts that guests will get to see different side to destinations than if they'd stayed in a hotel.
Both the sites enable guests and hosts to leave reviews and feedback about each other. Airbnb links with Facebook so that you can see where your friends – and their friends – have stayed.
So how much money can you make from renting out spare space this way? Inevitably that depends on what you're offering and where. Londoners can get £50 a night or more for a double room while rates start at about £30 in Manchester.
As well as nightly rentals, you can rent out properties for weeks or longer too. This could be handy if you wanted to rent out your place while you were on holiday or needed a short-term tenant for any of a handful of reasons.
Listing a property on Airbnb is free and the site takes a 3 per cent cut of each accepted reservation as well as charging guests a booking fee of between 6 and 12 per cent. Guests pay the site and the payment is passed to the host 24 hours after the guest checks in. There's also an option to take a deposit from the guest and any disagreements about its return are mediated by Airbnb.
Wimdu works in a similar way. Hosts are charged 3 per cent of each booking fee and travellers 12 per cent of the fee. So if you rented a room out for £100, the host would pay Wimdu £3 (and so receive £97) and the visitor £12 (paying a total of £112).
Interest in short-term lettings is likely to peak in the UK this summer when the Olympics come to London and millions of sports fans need somewhere to stay. With hotels hiking up prices, affordable accommodation across the capital will be in demand.
"Flats, homes, and rooms are already being booked. Many people started booking their accommodation on Airbnb in July 2011, more than 12 months before the games began," says an Airbnb spokesman, "Right now we are seeing one-bedroom flats going for anywhere from £200 to £400 a night depending on their proximity to the Olympic venues. This represents a 100-200 per cent price premium for the Olympics."
Inevitably renting out a room to someone you don't know involves a leap of faith. Although you can read other people's reviews of both properties and guests, there's a huge trust element in letting a stranger into your home.
There's already been one high-profile case in which a San Francisco apartment let through Airbnb was ransacked and burgled. Since then the site has introduced $50,000 insurance per letting covering losses due to theft and vandalism, and a 24-hour customer service hotline. Wimdu offers £43,000 of free insurance per booking.
Peter Harrison, an insurance spokesman at MoneySupermarket.com, says anyone contemplating using their spare room this way will have insurance issues to contend with.
"I would advise anyone thinking about letting tourists and travellers into their homes as temporary paying guests to check with their home insurer first to ensure that they would still be covered by their policy," says Mr Harrison.
"Homeowners should be completely honest about the way they intend to use their homes and fully explain the situation to their buildings and contents insurer to avoid any issues should they be a need to make a claim through their home insurance during this period.
"You may find you also need additional insurance such as public liability insurance to cover anyone injuring themselves on or around your property."
People who own their homes with the help of a mortgage – the majority – should tell their lender what they are doing and check that it is permissable under the terms of the the home loan. As for tax, the Government offers the rent a room scheme, which allows homeowners to rent a room in their own home – although it has to be furnished – for up to £4,250 a year before income tax is payable.
As well as being a way to make some extra cash, Airbnb and Wimdu can save travellers money too. Rooms are generally cheaper than hotels and you get the added benefit of interaction with locals in your destination.
Boris Gustaffson, 36, a management consultant living in London, used Airbnb when he ran the Stockholm marathon last year. He says: "I had left hotel booking too late, all the hotels were nearly £200 per night and so I found an apartment on Airbnb for £65. The landlord was trying to sell the apartment – otherwise I think it can feel a bit strange staying in a stranger's home.
"It was really good though as I got to stay in an area without tourists, and use local shops and restaurants."
Case Study
Kyriaki Gerontaki, 46, Oval, south London
Ms Gerontaki, 46, has made £2,500 since she started renting out her spare bedroom in Oval in September last year.
She advertises on Wimdu, charges £60 a night and provides breakfast for her guests as well as giving them the run of her flat.
Ms Gerontaki says: "I have a spare room and decided to have guests to stay. I'm a ceramic artist but not earning any money at the moment so income from the room is all I have to pay the mortgage and my bills.
"I haven't had any bad experiences so far. All the guests have been nice and grateful to get a good deal. I like to meet and engage with people. But, they tend to be out a lot of the time as they have come to visit London."
"It's like having guests, the only difference is they pay," she says, "I much prefer it to having a full-time lodger and the money's better."
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