The total value of tax relief declared as a result of the government’s Rent a Room Scheme has soared 187 per cent in the past decade or so. 

An analysis of government data by property management service Houst suggests that a record £140.5m was declared over the 2018/19 period, up from £48.8m back in 2008/09. 

The Rent a Room scheme is designed to assist those renting a space in their primary residence allowing them to take in a lodger and earn up to £7,500 a year tax free. The current maximum value of relief under the scheme has changed significantly in the same 10 year period, jumping from a previous threshold of £4,250 to the current level in 2016/17.

Houst says a significant factor driving the surge is likely to be the incentive of a tax-free income of up to £7,500 a year and what it believes is a willingness amongst more people to develop a ‘side hustle’ – another stream of income, whether through taking a lodger of hosting short let stays. 

Tom Jones, chief commercial officer at Houst, says: “Given enormous economic uncertainty, people are increasingly viewing personal assets as a vehicle to drive up their incomes by turning their homes into money making properties.” 

He says that the pandemic – which is not covered by the government tax figures – may have accelerated this trend as many will have reconsidered their living arrangements and their finances.

“The pandemic has especially given second-home owners pause for thought, forcing many to debate the next step for their properties. With an anticipated surge in demand expected from staycationers at coastal resorts across the country this summer, second-home owners are uniquely placed in being able to prop up the shortfall left by traditional accommodation by renting out their properties” he adds.