An analysis of the data by property management service provider, Houst, revealed a record amount of £140,500,000 was declared over the 2018/19 period, up from £48,800,000 in 2008/09. The data also highlights a surge in the number of homeowners taking in lodgers across the period, with the number of tax relief declarations rising sharply across the decade.
The Rent a Room scheme is designed to assist those renting a space in their primary residence allowing them to take in a lodger and earn up to £7,500 a year tax-free. The current maximum value of relief under the rent-a-room scheme has changed significantly in the same 10 year period, jumping from a previous threshold of £4,250 to the current level in 2016/17.
Houst says the data suggests a general nationwide uptick in the number of homeowners deciding to turn their spare rooms into spare cash through the Government’s Rent a Room scheme. A significant factor driving the surge is likely to be the incentive of a tax-free income of up to £7,500 a year which represents an increase of approximately 55% on previous levels.
The increased number of declarations also indicates a fast-rising trend of homeowners utilising their property to drive an additional stream of income. This trend is likely to have intensified dramatically since the onset of the Coronavirus pandemic, the period of time for which MHCLG data is currently unavailable.
During this 10 year period, there has been a boom in the availability of technology-driven property management services, including its own system, and as such it has become exponentially more simple to rent out a room or a property to simply supplement income at speed.
Not only has the last 10 years seen a boom in technological solutions to property management, but since the economic crash in 2008, the UK has seen a large increase in the number of people actively seeking out a ‘side hustle’ in order to solidify another stream of income and utilise their empty properties. Whether it's renting a room or offering up an entire home to Airbnb renters, spare spaces are becoming an increasingly popular means by which anyone can set up their own side hustle.
Tom Jones, Co-Founder and Chief Commercial Officer of Houst, says: “Thanks to the digital solutions of the last decade, homeowners are now able to fill their properties quickly and efficiently, whether that be a spare room or a second home, and generate a secure and regular source of income. Given the enormous economic uncertainty, people are increasingly viewing personal assets as a vehicle to drive up their incomes by turning their homes into money-making properties.”
Whether it be due to an increasing number of people embracing the entrepreneurial spirit and looking to generate multiple sources of income, or whether it comes down to an increasingly difficult job market, property has increasingly become a viable option for those looking to top up their incomes. This uptick does not necessarily pertain only to those with a spare room to rent in their primary residence, but foresees growth in the general rental industry as a whole, including those with a holiday home or multiple properties.
The pandemic is likely to have accelerated the number of homeowners looking to take in lodgers. The economic turmoil of COVID-19 saw millions face job uncertainty or experience a significant dip in income, leaving many looking for readily available means of securing a reliable source of income. The reality of the pandemic is that it has forced many to reconsider their living arrangements and look directly at how we occupy our homes and how exactly they could be used to stave off economic concerns. The pandemic has transformed how millions see and use their homes, leading many to reconsider its potential as a stable driver of income.
Tom adds: “The pandemic has especially given second-home owners pause for thought, forcing many to debate the next step for their properties. With an anticipated surge in demand expected from staycationers at coastal resorts across the country this summer, second-home owners are uniquely placed in being able to prop up the shortfall left by traditional accommodation by renting out their properties.
He concludes: However, renting out homes on Airbnb to part-time renters can be labour intensive and require ongoing input in terms of cleaning, fast turnovers and admin. There is enormous potential for millions to support UK tourism and boost their own finances through renting out, but time-poor owners definitely need a robust management system to ensure they’re maximising value when embarking on this kind of side hustle.”
