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Rent a room allowance upped to £7,500

There was good news for homeowners letting a room to lodgers in the summer Budget. The tax-free Rent-A-Room limit has been upped from £4,250 to £7,500.

Matt Hutchinson, director of flat and house share site SpareRoom.co.uk, said the Chancellor’s change to the Rent-A-Room scheme has potentially huge implications for the scarce supply of affordable rented accommodation.

“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.

“There are an estimated 19 million empty bedrooms in owner-occupied properties in England alone. Freeing up just 5% of those rooms would accommodate almost a million people – the equivalent of a city the size of Birmingham.

“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.”

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  • Peter Lassman

    A good move, it will hopefully bring a lot more rooms to the rental market if home owners were unsure of allowing a room to be rented out and tenants could have more choice about where they live Peter

  • Just Mogler

    Question..but as a lodger is he/she subject to the 'Right to Rent' checks required for a leasing tenant or has this been missed by the government


    According to the direct.gov site, yes they do. all tenants now have to prove their right ot reside in the UK.

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    are lodgers tenants?

  • Suzanne Morgan

    Is there a likelihood this threshold will go up. Energy costs and Council Tax have risen since 2015.

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    • 18 June 2019 22:56 PM

    The RFR A should be abolished.
    All lodger income received by a LL at their nominated PPR should be TAX FREE!!
    LODGERS are required to undergo RTR checks.
    Such a policy might inspire homeowners to extend to better cope with lodgers.
    Lodger income can pay for extensions after about 4 years and that is just from one lodger.
    With SDLT being do high and S24 making it pointless for many LL and new LL then making family homes capable of letting to lodgers and family makes economic sense.
    Obviously homeowners would mostly need to be HMO compliant.
    But the Lodger strategy without any tax could release millions of rooms to lodgers to ease pressure in the general AST lettings market.

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    Rent a room Scheme is unfair & another distortion of the market, used as a cover to rent to 3 / 4 people, where as we have to pay tax on every penny and get a HMO license in many areas whether Selective or Additional & why are related persons exempt this is Discrimination / taking the mick.

    • 03 September 2019 22:00 PM

    You forget that RFR is meant for where the LL is Residential at the property.

    Therefore there s NO unfair competition with AST lettings.
    There are very few LL that would choose to have Lodgers in their home.
    Of course where there are more than 4 unrelated occupiers in a home then Mandatory HMO licensing is required unless the occupiers are guests.
    There are a few other exclusions as well.
    But in no way can a live-in LL be considered unfair competition because they are allowed a tax free allowance.
    You are comparing apples with pears.
    As I have mentioned before it would be far better for all concerned if there was NO RFRA and that ALL lodger income was tax free.
    This would send a very simple message out to all homeowners that there would be no paperwork etc beyond that of RTR regulations and gas certificates.

    Encouraging homeowners to take in LODGERS would greatly assist the pressures on the housing market for rental circumstances.
    I don't know why the Govt DOESN'T abolish the RFRA as very few lodger LL would ever declare anymore than the current £7500 allowance.
    HMRC should just accept that the the RFRA is routinely EVADED.
    SO why bother trying to even detect those lodger LL that evade the RFRA!?
    It would okay well electorally if Govt announced the end of the RFRA with ALL lodger income being tax free.
    Such a situation would greatly assist those who gave large houses but don't wish to sell but now have vacant spare rooms.
    Such homeowners could take on lodgers and then go and rent in sunnier climes returning on a monthly basis to retain compliance with residential insurance conditions.
    Plus to collect mail and address any issues at the property or with the lodgers.
    There are about 19 million spare rooms along with about 800000 empty properties.
    Encouraging usage of these existing assets should be done.
    The RFRA makes little difference to tax receipts as most LL evade it.
    So Govt should just accept this and make a big statement that all taxation has been removed from homeowners who take in lodgers.
    If this means there are fewer tenants for the PRS then so be it.
    It should be Govt policy to encourage it usage of existing assets especially Residential properties.
    Govt wi never achieve taxation of lodger income in excess of the current £7500 RFRA so why bother!?
    Spare rooms need to be actively encouraged to be used.
    Completely tax free lodger income would be a start.

  • Suzanne Morgan

    The Rent a room or Spare Room Scheme enables so done to have a Lodger. Tax is paid after the 7,500 threshold so someone having '3/4' lodgers is going to be paying tax . I have a Lodger and it supplements my pension. It also gives a home to someone who requires accommodation. The requirement is that the person letting out the room is registered to live there as their main home. Nothing wrong with that surely.


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