Spare room rental set to rise
At present people are able to rent out a room in their property and receive £4,250 of income tax free. However, changes announced in Chancellor George Osborne’s summer Budget mean this allowance is set to rise.
From April 2016 the threshold will be raised from to £7,500 per year, something which will allow homeowners in virtually all of the UK outside of London to rent out a room tax-free.
SpareRoom – an online service offering single rooms for rent – said that if 5% of UK homeowners took part then almost one million more rooms would be available for rent.
Matt Hutchinson, SpareRoom director, said this would help homeowners manage their finances better, and provide some relief for the UK’s housing crisis.
“The increase to the rent a room scheme threshold is long overdue, having remained fixed since 1997. The extra cash could really help when interest rates rise and mortgage payments follow,” he said.
“It’s great news for renters too. In the midst of a housing crisis, and with building levels lagging well behind required targets, the new rent a room scheme threshold should incentivise more cash-strapped homeowners to let their spare rooms, increasing the supply of affordable accommodation and reducing the pressure on rents.
“It’s something we campaigned for over six years, so we were thrilled to get a call from the Chancellor’s office on budget day to let us know it was happening. Even if we build at the levels we need we’ll only increase housing stock by 1 or 2% a year so making better use of existing stock is vital.
“It’ll be interesting to see what happens in the run up to April. It’s likely many will start taking advantage of the current tax break this tax year.”