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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.”

  • 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.

  • Paul Barrett

    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.


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