Homeowners Embrace Lodgers: 89% Increase in Spare Room Rentals

New data from SpareRoom reveals a significant surge in homeowners renting out spare rooms, with a 89% increase over the past three years. Average monthly rent for lodgers has also risen by 12% to £739.

The trend of homeowners taking in lodgers has seen a significant increase, with new data showing an 89 per cent jump over the past three years. According to findings by SpareRoom, the flatshare site, the number of homeowners renting out spare rooms has surged from January 2021 to January 2024. This increase comes as the average monthly rent paid by lodgers has also risen, reaching £739 at the end of 2023, up from £658 at the end of 2022, marking a 12 per cent increase.

The surge in homeowners taking in lodgers is attributed to the financial strain experienced during the festive period, prompting individuals to seek additional income by renting out their spare rooms. The high cost of living, coupled with increased mortgage rates in 2023, has further incentivized homeowners to explore additional sources of income. As a result, SpareRoom has called on the Government to raise the threshold in its Rent a Room scheme, which currently allows individuals to earn up to £7,500 tax-free by renting out a room in their home.

SpareRoom argues that increasing the threshold in the Rent a Room scheme would not only provide much-needed financial relief to struggling homeowners but also contribute to addressing the shortage of rental properties in the market. The cost of renting a room varies significantly across the UK, with the average monthly rent standing at £739. Regional disparities are evident, with the North East offering rooms at £533 per month, while London commands a much higher average of £1,014 per month.

The Rent a Room scheme allows homeowners to let out a furnished room in their main residence without paying tax on the income, provided it does not exceed £7,500 in any tax year. Estate agents have expressed support for increasing the tax relief, citing its potential benefits for both homeowners and renters.

The significant increase in homeowners taking in lodgers reflects the growing financial pressures faced by individuals, prompting them to seek additional sources of income. The call to raise the threshold in the Rent a Room scheme underscores the need for policy adjustments to address the challenges posed by high living costs and mortgage rates.