Flat share company SpareRoom, supported by housing charity Shelter, the National Landlords Association and property expert and TV presenter Sarah Beeny, have launched the Raise the Roof campaign to secure a fair deal from the Treasury for people who choose to rent out a room in their home. Since April 1997 no change has been made to the income threshold of the Rent a Room Scheme, which was established by the previous government to encourage people to rent out a spare room. The threshold at present is £4,250.00 per annum; the Raise the Roof campaign and Shelter would like to see this rise to £9,000.00 per annum.
At a time when many families and individuals are suffering the consequences of the recession it is beholden on a progressive government to do all it can to help reduce the financial impact of the economic downturn. We have seen Gordon Brown and the cabinet make decisions that demonstrate that, unlike Conservative governments of the past, this government is willing to intervene to help alleviate the impact of the recession where it can.
Raising the threshold of the Rent a Room Scheme would in a single stroke provide the many thousands of existing homeowners renting out a spare room with additional income, while costing the Treasury little. At present the average income from renting a spare room is £4,325.00, meaning thousands of homeowners are being obliged to complete an inland revenue self assessment form for an income of less than £100.00, and according to the HMRC the cost of processing a self assessment form is £17.00, so reducing the income to the Treasury even further.
Raising the threshold would provide additional income to hard pressed homeowners. A recent report by The Resolution Foundation found that low earners will feel the impact of the recession long after many others are enjoying any recovery. The report highlighted the fact that 28% of low earners are homeowners and have high loan to value ratios that make them more exposed to arrears and repossession, with 3.6% already suffering from negative equity.
The impact of the change would be felt in every community in the country and would have an even greater impact in towns and cities where average room rentals are far greater than the national average of £4,350.00. For example in London, according to SpareRoom the average room rental is currently over £6,500.00 per annum and 46,870 homeowners have an income from room rental above the current tax threshold.
Far from being a marginal issue it is something that is real and present for thousands of homeowners. So far in 2009 in inner London there are over 7000 homeowners looking to rent out a spare room registered with SpareRoom, in my home town of Salisbury there are 200 registrations. In many Labour target areas the picture is similar, in Reading there are 1000 registrations, in Harrow there are 350 and in Swindon there are 250. These numbers are only for people currently looking for new housemates, there are many more that are not registered with SpareRoom or have existing tenants and so don’t show up in these figures.
If the government is serious about providing multiple options for affordable homes and is serious about helping families through the recession then raising the Rent a Room threshold is simply a ‘no-brainer’. It is the right thing to do and it might even win a few friends and a few votes where it matters.