With an estimated 485,738* students heading off to university, a significant number of home owners and families will be left with empty rooms in their homes.
The good news is that a room could be worth up to an estimated £4,250 tax free under the government’s Rent a Room scheme, and you don’t have to be a homeowner to take advantage. If you are currently renting your home and your lease allows you to take in a lodger you too can also benefit from the scheme.
With an increase in the average number of potential tenants looking for each rental room, homeowners are perfectly placed to tap into this high demand. In popular cities such as London and Cambridge, the average monthly rent for a room is £520 and £430 respectively, allowing homeowners to benefit from up to an additional income of £6,240 on average in London and £5,160 in Cambridge.
Cities with the highest rental demand per property
|City||Renters per room available||Average rent pcm (£)|
The scheme entitles you to rent out a room or an entire floor within your home and it is simple to opt into. If you don’t normally receive a tax return and the additional income from the room is below the tax-free thresholds for the scheme, the tax exemption is automatic so you don’t need to do anything. The HM Revenue and Customs must be informed once the annual rental income is above the tax-free limit.
*UCAS figures 2011