SpareRoom is urging the Chancellor to raise the Rent a Room Scheme threshold to £11,000 a year, arguing that a higher tax-free allowance could bring more lodger accommodation back to a rental market where room supply is already shrinking.
The flatshare platform said lodger landlords now provide 24 percent of all UK flatshare supply, but the number of households advertising rooms to lodgers fell 1.7 percent in the year to the second quarter of 2026. It also wants the government to add a 31-day minimum stay rule so holiday lets cannot benefit from the same relief.
An older tax threshold now sits awkwardly with today’s room rents. SpareRoom says the allowance has stayed at £7,500 since 2016 even though average UK room rents have climbed sharply, which means more would-be live-in landlords risk crossing into self-assessment for what is often modest extra income.
SpareRoom says lodger supply is sliding as rents stay high
This follows Landlord Knowledge’s July report on SpareRoom data showing flatshare supply falling while six regions hit record room rents and its later coverage of inner London room supply shrinking in Q2. The latest SpareRoom campaign page adds a tax angle to the same supply problem.
Matt Hutchinson, director of SpareRoom, said the UK was behind on housebuilding targets and that raising the threshold was a quick way to ease pressure without “laying a single brick”. He said any tax lost by raising the allowance could be offset by taxing holiday lets that currently benefit from the scheme.
SpareRoom said average UK room rent is now £761 a month, while rooms advertised by live-in landlords average £729. On its figures, an £11,000 threshold would place 94 percent of UK postcode districts within the annual allowance, compared with 41 percent under the current limit.
Tax friction is becoming part of the supply story
This follows Landlord Knowledge’s wider coverage of supply pressure feeding through into higher rents and tighter competition for shared homes. If ministers want extra low-cost room supply quickly, the point here is not new-build delivery but whether the tax rules still give owner-occupiers enough reason to take in a lodger.
SpareRoom also cited survey evidence showing 83 percent of potential or former lodger landlords would be more likely to rent out a room if the threshold were higher. A further 40 percent said they had stopped renting out a room because earnings would go above the current limit and trigger a tax return.
For landlords, the immediate read-across is broader than the lodger market itself. If more spare rooms came back into use, that could take some pressure off entry-level demand in the shared sector, especially in cities where affordability has been stretched by the Renters’ Rights Act, weak supply growth and high room rents.
What this means for landlords
- If you let rooms in HMOs or shared houses: any move that lifts lodger supply could add modest competition at the lower-cost end of the market.
- If you are a live-in landlord: the Budget is the key date to watch for any threshold change or tighter rules on holiday-let use.
- Watch for: whether ministers treat Rent a Room as a housing-supply tool rather than a tax side issue.
- If you track affordability trends: cheaper lodger rooms could matter most in high-rent cities where tenants are trading down.
- Bottom line: SpareRoom is arguing that a small tax change could release room supply faster than many larger housing measures.
Editor’s view
The politics here are simple enough. Ministers want more housing supply, but one part of the system still makes it harder for ordinary households to offer a spare room once rent edges above an old threshold. If the Budget leaves Rent a Room untouched again, landlords can assume supply pressure at the cheaper end will stay intense.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 2 September 2026
Sources: SpareRoom
Related reading: SpareRoom says Q2 room supply fell as six regions hit rent highs
