Lodger tax changes boosts rental supply

According to new data, almost a quarter of a million homeowners have advertised for lodgers since the Rent a Room scheme threshold was raised in the Summer Budget.

Under the new rules, from 6th April homeowners can earn £7,500 a year tax free by letting rooms.

Since the announcement of the increase to the Rent a Room Scheme tax threshold to £7,500 per year almost quarter of a million (233,697) homeowners have advertised for lodgers. This is an increase of more than 5.2% on the same period a year earlier.

The data also reveals that August – the month following the Chancellor’s Summer Budget announcement – was the busiest since records began in 2007, with 31,109 people placing ads for lodgers.  

The table below shows average monthly and annual lodger rents in Q4 2015, for the UK’s 50 biggest cities. London is the only major city where annual lodger rents are still higher than the new threshold, which kicks in on 6th April 2016:





















































UK’s 50 biggest towns/cities by population

Monthly lodger rent (£) including bills


Q4 2015

Annual lodger rent (£) including bills


Q4 2015

Oxford

£568

£6,816

Aberdeen

£509

£6,108

Edinburgh

£496

£5,952

Reading

£488

£5,856

Poole

£469

£5,628

Milton Keynes

£468

£5,616

Bristol

£456

£5,472

Bournemouth

£450

£5,400

Cardiff

£437

£5,244

Southampton

£436

£5,232

Southend-on-Sea

£435

£5,220

Glasgow

£432

£5,184

York

£426

£5,112

Luton

£418

£5,016

Ipswich

£417

£5,004

Portsmouth

£414

£4,968

Manchester

£409

£4,908

Swindon

£409

£4,908

Birmingham

£407

£4,884

Newcastle

£406

£4,872

Northampton

£406

£4,872

Leeds

£405

£4,860

Dundee

£404

£4,848

Coventry

£399

£4,788

Peterborough

£394

£4,728

Plymouth

£391

£4,692

Norwich

£389

£4,668

Stockport

£387

£4,644

Middlesbrough

£381

£4,572

Walsall

£378

£4,536

Telford

£377

£4,524

Swansea

£375

£4,500

Liverpool

£374

£4,488

Sheffield

£374

£4,488

Nottingham

£370

£4,440

Sunderland

£369

£4,428

Derby

£368

£4,416

Leicester

£367

£4,404

Dudley

£364

£4,368

Preston

£362

£4,344

Stoke-on-Trent

£357

£4,284

Blackpool

£352

£4,224

Bolton

£350

£4,200

Bradford

£348

£4,176

Hull

£346

£4,152

Wolverhampton

£345

£4,140

Huddersfield

£344

£4,128

West Bromwich

£335

£4,020

Belfast

£322

£3,864

London

£708

£8,496

UK (excluding London)

£424

£5,088

Matt Hutchinson, director of SpareRoom.co.uk, comments:  “Across the UK, room rents are rising by 5.5% a year. The abolition of tax relief on mortgage interest could force rents up even further as landlords look to cover costs, so this change to the Rent a Room scheme can’t come soon enough.

The UK is in the grip of a housing crisis nobody can see an end to. We’re not building anywhere near enough new homes so we have to make sure we’re using the ones we already have as effectively as possible. Incentivising even a small percentage of homeowners sitting on the 19 million empty bedrooms in owner-occupied properties to let them out would do just that. That’s why we campaigned for this change for six years and are delighted to finally see it come into effect.”

Matt’s top three tips for renting out your room:

  1. It’s not just a financial transaction; it’s also about compatibility and lifestyle. Would you prefer a lodger you rarely see, or one you can eat dinner and watch a box set with? Everyone has different expectations, so think about who you’re looking for before you start looking.
  2. Get a sense of what kind of rent you might get for your room by looking at others in your area. Don’t forget, the vast majority of lodger rents include bills, so make sure you’ve factored that in when you set your rent.
  3. Draw up a lodger agreement2 and talk through the arrangements and house rules upfront. Discussing simple things in advance – like whether your lodger can have guests to stay – will avoid problems later on.

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Lodger tax changes boosts rental supply
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