Lodger supply drops for first time since 2020 amid rising rents

Rental supply from lodger landlords has fallen for the first time since the pandemic, according to new data.

Findings by SpareRoom reveal that landlords who rent out rooms in their own homes make up a quarter of all supply in the flatshare market, but this has declined in recent years due to the government not updating its Rent a Room scheme since 2016.

SpareRoom has called on the government to incentivise more under-occupied households to rent rooms to lodgers.

28 million empty bedrooms

According to the data, lodger room ads decreased in January 2026, falling 2.5% year-on year.

The peak came in January 2017, after the amount of tax-free income that lodger landlords could earn was increased to £7,500 per year.

In 2017, the UK’s average monthly room rent was £573, which SpareRoom says kept earnings well within the threshold limit, which equates to £625 per month.

Over the past five years, however, the UK average room rent has risen 29% from £580 per month in Q4 2020 to £749 per month in Q4 2025.

SpareRoom has urged the government to raise the tax-free threshold to match current rents. It estimates there are 28 million empty bedrooms in England, Wales, and Scotland, and renting out just 5% could provide affordable housing for 1.4 million people.

A booster shot in the arm is what’s needed now

Matt Hutchinson, director of flatshare site SpareRoom, said: “In the middle of a housing crisis, we should be doing everything possible to protect supply in the rental market, whether it comes from landlords or homeowners. Lodger landlords and the rooms they offer make up a sizeable wedge of the flatshare market and although renting as a lodger doesn’t suit everyone, the flexibility and often cheaper rents are a draw.

“The last time the Rent a Room scheme was altered, supply rose and remained at healthy levels until the pandemic. A booster shot in the arm is what’s needed now. We know the administrative burden of having to fill out a tax return does deter people from renting out rooms, so the tax-free threshold needs to reflect rents today.”

He adds he wants to see the loophole that allows holiday lets to use the scheme closed.

He said: “But we also want to stop those running holiday lets from using the scheme, so we can divert supply into the rental market. We shouldn’t be incentivising short-term holiday stays when there’s such a large supply-demand imbalance in the rental market. We need housing, not hotel rooms.”

Rely on lodger income to pay their mortgage

The survey also reveals that more than half (51%) of people rent out rooms in their homes to help cover day-to-day costs such as food, bills, or car expenses.

A quarter (25%) rely on lodger income to pay their mortgage, while 28% use it to save for retirement or top up their pensions.

Beyond finances, more than a fifth (22%) cite companionship or friendship as a reason for taking in lodgers. Nearly a quarter (23%) value the security of having someone in their home while they are away, and 9% appreciate having help with tasks like pet care or watering plants.