SpareRoom is calling on the Chancellor to update the Rent a Room scheme in the Budget, as the supply of lodger rooms and overall rental supply both decline. The flatshare website argues that people renting out rooms in their own homes add to supply and help curb average rents.
Lodger rooms made up 34% of total UK flatshare supply in the third quarter of 2026, according to SpareRoom’s data, yet that supply fell 1.4% year on year. In inner London, lodger rooms account for 17% of supply and dropped 2.9% over the same period.
Lodger room supply peaked in the years after the tax-free threshold last rose in April 2016, a change announced in 2015, and fell sharply during the Covid years. It has not fully recovered since. Overall flatshare supply has also entered negative growth across the UK.
UK Rent a Room scheme threshold unchanged for a decade
Ireland has announced that its annual rent-a-room relief threshold, the amount households can earn tax-free from renting rooms to lodgers, will rise from €14,000 to €16,000 next year. In the UK, the tax-free threshold has stayed at £7,500 per year for a decade.
Lodger landlords also offer rooms that are, on average, £515 per year cheaper than those from traditional landlords. SpareRoom estimates there are 28 million empty bedrooms in England, Wales and Scotland, and says that while not everyone can rent these out, freeing up just 5% of them would provide affordable accommodation for 1.4M people.
ONS 2021 census data shows around 8.9M homes in England and Wales have at least two spare rooms, with a further 8.3M having one, while the Scottish Housing Condition Survey 2023 puts the estimate for Scotland at 1.8M.
“Not a single brick needs to be laid to boost lodger rental supply,” said Matt Hutchinson, director at SpareRoom. “Simply increase the threshold, awareness grows, and rooms hit the market.
"We saw this play out in 2016 and there’s no reason it shouldn’t work again. Right now you can only earn £625 per month in lodger rent before you have to declare the income, which isn’t reflective of rents today. As a result, people are pushed into completing a tax return, which we know from having spoken to plenty of would-be lodger landlords is a significant deterrent. For an incentive to work, it needs to keep pace with the times.
“It’s also really important to keep this supply in the rental market, where it’s so desperately needed. That could be achieved by adding a 31-day minimum stay requirement to the scheme’s terms, closing the loophole that allows people offering holiday lets to benefit from this tax relief.”
