Research and analysis

Executive Summary: Evaluation of Rent a Room relief

Published 5 December 2024

Executive summary 

HM Revenue and Customs (HMRC) asked Ipsos to carry out an evaluation of the Rent a Room landlord population. The Rent a Room Scheme lets individuals (referred to in this report as Rent a Room landlords) receive income up to a tax-exempt threshold of £7,500 per year, from letting out furnished accommodation in their home. 

The evaluation involved 2 waves of quantitative surveying online (between 31 August and 20 November 2023), to measure: 

• the prevalence of Rent a Room landlords in the UK adult population 

• the profiles and rental arrangements of these landlords and their tenants 

• the awareness and perceptions of the Rent a Room Scheme 

The survey results cover a sample of 10,391 UK adults aged 16 and over, and a sample of 1,051 Rent a Room landlords specifically. All results are weighted to be representative of these respective groups. 

Size and profile of the Rent a Room landlord population 

In total, 6% of UK adults were renting out a furnished room in their home. This included 3% saying they charged rent to the people living with them, 3% charging for contributions to bills and other services, and under 1% running a bed and breakfast. 

Compared to the wider adult population, Rent a Room landlords were: 

• more concentrated in urban locations (84% were in towns and cities, versus 79% of all UK adults), and in the south of England (53%, versus 45% of all UK adults) 

• less likely to be owner occupiers (66%, versus 75% of all UK adults) 

• more affluent (27% were higher or additional rate income taxpayers, versus 12% of all UK adults) 

• younger in their age profile (13% were aged 65 and over, versus 23% of all UK adults) 

Around a fifth either owned more than one property (22%), or spent time living in more than one property (18%). 

Characteristics of the tenants 

Around half of all Rent a Room landlords (51%) had accommodated no more than one tenant at any one time in the past 12 months. A further quarter (26%) had hosted 2 tenants. Fewer (23%) had hosted 3 or more tenants. 

Over three-quarters (78%) had accommodated tenants who were in work. A third (32%) had taken on tenants who were not working (unemployed, retired or studying). Among those not working, student renters were the most common group (18% of landlords had rented to students). 

In most cases, landlords knew their tenants. Two-fifths (42%) had specifically charged rent, or for contributions to bills and services, to their children, while a third (33%) had done so with other family members. Around one in ten (11%) had rented to strangers. 

Almost three in five Rent a Room landlords (59%) said that their tenants considered the property as their main home, as opposed to somewhere they were staying on a temporary basis (17% staying for short-term or temporary work) or for tourism (8%). 

Seeking tenants and typical rental arrangements 

Three-fifths (58%) of Rent a Room landlords did not advertise their room beforehand. A quarter (26%) used a form of online advertising, including property search websites (11%), homestay platforms (10%), other online social media platforms (9%), estate agent websites (6%) and their own websites (6%). 

Half of Rent a Room landlords (50%) had no fixed duration agreed for one or more of their tenancies in the last 12 months. Among the Rent a Room landlords that did enter into any fixed rental arrangements, the most common rationale given for the length of the arrangement was that it was the expected length (30% mentioned this). 

Rental income 

In 9 out of 10 cases (90%), rental incomes from the last 12 months were below the £7,500 tax-exempt threshold for the Rent a Room Scheme. The mean annual rental income was £3,580 and the median was £2,000. 

Mean rental incomes were higher in London (£6,300), among those who advertised on online homestay platforms (£8,240), among those who owned more than one property (£5,990) and among those who lived in more than one property (£5,920). 

Deposits 

A quarter (25%) of Rent a Room landlords charged a deposit to any of their tenants in the last 12 months. Among this 25%, the mean amount for the last deposit they charged was £970 and the median amount was £490.  

Among those charging a deposit, around half (51%) collected these on the agreed move-in date, a third (33%) requested deposits to be paid up to 3 months before, and a quarter (24%) had requested payment between 3 and 6 months before the agreed move-in date. It was much rarer to request that deposits be paid more than 6 months in advance (5%). 

The vast majority (95%) of Rent a Room landlords who asked for a deposit said this was refundable. Among this 95%, the refund was most commonly linked to the room being well maintained (52%), or property not being damaged (51%).  

Awareness and attitudes regarding the Rent a Room Scheme 

Around two-fifths (41%) of Rent a Room landlords had heard of the Rent a Room Scheme. Around a third (34%) had heard of the £7,500 tax-exempt limit specifically. 

Of the 41% aware of the scheme, over 6 in 10 (64%) reported they find it simple. Around half agreed that if the scheme did not exist, people in their situation would: 

• not declare their rental income (50%) 

• not rent out their spare room (48%) 

• increase the amount they charged in rent (47%) 

Overall, the evaluation suggested that the scheme was positively received. When given the opportunity to suggest improvements, close to 6 in 10 (59%) of the Rent a Room landlords who had heard of it before said they had no improvements to suggest. Around one in 10 (12%) said that the tax-exempt threshold should be raised, and this response was often linked to people mentioning the cost of living, high inflation, or high energy prices. There were no other consistent themes for improvement that came across in the responses.