Rent A Room consultation will hit Airbnb style letting

Rent A Room consultation will hit Airbnb style letting

9:19 AM, 10th July 2018, About 6 years ago 19

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The Government consultation on Rent A Room tax reliefs looks set hit Airbnb style letting of entire properties rather than individual room lodger type agreements.

Click here to see the full consultation.

Executive Summary:

Rent a room relief allows individuals to earn up to £7,500 tax free from letting out furnished accommodation in their main or only residence. The original intention of the relief was to increase the quantity and variety of low-cost rented housing, giving more choice to tenants and making it easier for people to move around the country for work.

Since rent a room relief was first introduced in 1992, the PRS has more than doubled in size and the emergence of online platforms has made it easier than ever for those with spare accommodation to access a global network of potential occupants.

Against that backdrop, the government sought evidence against three objectives, which were to: find out more about the use of the relief; establish whether the relief is working as the government intends; and to help inform any potential reform of the relief.

Key conclusions from the call for evidence are that:

  • The government will retain rent a room relief at its current level of £7,500. Responses to the call for evidence indicated that in most cases, individuals would not be prepared to let out their spare rooms if the relief was not available. Given that, there was a consensus amongst respondents that rent a room relief provides an effective incentive for people to make their spare rooms available for rent. £7,500 exceeds by over £1,000 the average annual cost of renting a room in the UK. The limit was increased from £4,250 in April 2016, and the government will keep this under review
  • There is no evidence to suggest that tenancy length or tenancy type is anappropriate proxy for achieving the government’s objectives for rent a room relief. Most respondents suggested that individuals make decisions about what kind of tenancy to offer for a wide variety of reasons; the behaviour of those with spare rooms is highly specific to both their personal circumstances and the market they are operating in. Lodgers also value flexibility and benefit from a choice of different types of tenancies. There is no obvious rationale for the design of rent a room relief to favour one form of activity over another.
  • There is an opportunity to clarify the purpose of rent a room relief and ensure it is better targeted to achieve its original objective of incentivising the use of spare rooms. There was consensus amongst those who responded to the consultation that the purpose of rent a room relief is to support those with spare rooms to take in lodgers. The letting of whole properties was widely recognised as a different type of activity that should fall outside the scope of rent a room relief. However, the rules around what type of activity qualifies for rent a room relief are not currently clear on this point.
  • In response, the government plans to introduce a new shared occupancy test in rent a room relief. The new test will require the taxpayer to be living in the residence and physically present for at least some part of the letting period, for the income to qualify. This will ensure rent a room relief meets its original purpose of incentivising people to let spare rooms rather than whole properties, and will also clarify how rent a room relief interacts with the wider tax regime for property income. The government invites comments and submissions on the proposal for a new shared occupancy clause, before its introduction in Finance Bill 2018-19. The deadline for submissions is 31 August 2018.

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18:46 PM, 10th July 2018, About 6 years ago

Will the properties in this sector have to abide to the 6.51 sqm minimum room size kitchen size and bathrooms per tenant coming into effect in October?

Whiteskifreak Surrey

8:24 AM, 11th July 2018, About 6 years ago

Another exercise to get so much needed funds to fill Treasury's coffers. Tenant as usual does not count. The only truth is that majority of people who rent their rooms would not do it without tax incentive.

John MacAlevey

9:19 AM, 11th July 2018, About 6 years ago

Civil servants run the joint..always have.

James Barnes

9:27 AM, 11th July 2018, About 6 years ago

Reply to the comment left by Andrew at 10/07/2018 - 18:46My initial thought would be no as the minimum room sizes only apply to HMOs. Resident landlords can have up to two lodgers without the property being classed as a HMO.


10:39 AM, 11th July 2018, About 6 years ago

What if the room that was being let was 6.51 sqm or less thou. Surely we couldn’t have one rule for one and one rule for another🤔 The utilisation of a small room should be the same for all properties in all sectors. And the tenants choice!!

“This will ensure rent a room relief meets its original purpose of incentivising people to let spare rooms rather than whole properties” except if you have a HMO with the same small room.


11:58 AM, 11th July 2018, About 6 years ago

Reply to the comment left by Andrew at 11/07/2018 - 10:39
A homeless man wouldn't mind sleeping in a 3sq m room room if given for low cost rent or completely free to live in. Same goes for garden sheds, It will not only protect him from thugs, urinators and politicians, and cold weather but give him some place to call it a home. Politicians seem to live on another planet earth, whilst real people live on this earth.

Whiteskifreak Surrey

12:26 PM, 11th July 2018, About 6 years ago

It is beyond my comprehension, why this idiotic limit of 6.51 sq meters was imposed in the first place. The smaller rooms are never empty, and you can read that everywhere where LLs publish comments. They are small but therefore cheap. Even students, when they share a house, usually have at least 2 in a group who wants the smallest spaces, as that allows them to survive. The smallest room always gets booked first. What is here that these idiots in the Government do not understand?

Tobias Nightingale

13:11 PM, 11th July 2018, About 6 years ago

I could see the point about room sizes IF repeat IF it only applied to landlords that do conversions so then it would be in their power to make room said size or not. But making it apply to properties through no decision of the landlord to have the rooms of various sizes is not fair. After all its like they the rooms a particular size.

But reasonable is not what they are all about.

James Barnes

13:29 PM, 11th July 2018, About 6 years ago

Reply to the comment left by Mike at 11/07/2018 - 11:58That's akin to saying children in third world countries probably wouldn't object to working 18 hours a day in sweatshop for less than a dollar. That might be the case but it doesn't make it right and I don't think it puts landlords in a good light to be seen racing to the bottom in terms of standards, especially suggesting that renting out a garden shed is somehow justifiable.

Whiteskifreak Surrey

13:38 PM, 11th July 2018, About 6 years ago

Reply to the comment left by James Barnes at 11/07/2018 - 13:29
Garden shed is extreme, but 6 m2 room in a well appointed house is not. Especially if it was built a long time ago and the owner cannot do anything about it, as Tobias is saying... If it is not legal, why the building regulations allow for that? Does it mean that council house will be refurbished inside? Why it is OK for owner occupier to live in a small room, and for the tenant is not? They are free to vote with their feet, if they do not like it. But for some it could be a lifeline.

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