The existing limit has remained unchanged for 18 years, while average rents have soared. The move received a wide welcome.

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.

“The Rent a Room Scheme threshold has remained unchanged at £4,250 for 18 years. Only a fifth of UK towns and cities have average room rents of below that mark, while all rooms in London are way outside of the threshold.”