Room-rental sector set to explode, predicts lodging expert

Changes announced to the amount of money ordinary home owners can secure, tax-free, from letting out rooms in their homes have “potentially huge implications for the scarce supply of affordable rented accommodation” says one expert.

Matt Hutchinson, director of flat and house share site Spareroom, has campaigned since 2009 to get the current Rent A Room tax threshold raised, and assisted Solihull MP Julian Knight with his Budget submission to the Chancellor earlier this month.

Chancellor George Osborne’s Budget last week revealed that the £4,250 annual tax break for owners who let a room - a figure which has been frozen since 1997 - would rise next April to £7,500 a year. 

“In the midst of a housing crisis, and with building levels behind all forecasted targets, it’s vital we make better use of existing stock and this will do just that. All too often housing initiatives benefit a select few - but this helps millions of renters and homeowners” claims Hutchinson.

“There are an estimated 19 million empty bedrooms in owner-occupied properties in England alone. Freeing up just five per cent of those rooms would accommodate almost a million people - the equivalent of a city the size of Birmingham” he says.

“Encouraging people to take in lodgers could help them avoid repossession when interest rates rise and their mortgage repayments are adjusted. Lodger landlords can earn, on average, £8,335 per year in London, and £6,071 across the rest of the UK.”

Hutchinson says the existing Rent a Room Scheme threshold has remained unchanged at £4,250 for 18 years and that only a fifth of UK towns and cities have average room rents of below that mark, while all rooms in London are far outside of the threshold.