Remove the income tax payable for live-in landlords over 60 renting out a room long term
There are currently over 6m empty bedrooms in the homes of those aged 60+ in the UK. Homeowners aged 60+ account for 55% of all UK homeowners. For most of them, the central part of their wealth is in their homes, but they can also have cash flow problems.
Recently France passed a new law removing the income tax from those over 60 renting out rooms to those under 30 for a 180 day or more extended period. And we want to do the same. And go one step further by enabling those over 60 to rent out a room to a person of any age for long-term.
The number of people aged 65, as a percentage of the population, will increase by more than 40% within 20 years, and the number of households where the oldest person is 85 and above is rising faster than any other age group. (The State of Ageing 2019, Centre for Ageing Better).
The current rent-a-room scheme provides homeowners with £7,500 tax-free income that came into force in 2015. This is not a sufficient incentive for many to rent out their spare bedroom, where the average rent for a bedroom in London zones 2–3 averages £750–800/per month. It is especially true for single older women, who struggle with keeping the roof over their heads due to inadequate pensions (roughly £100k less than a man of a similar age).
Removing the income tax from long term room rental would provide those age 60+ with an average of £9k tax-free income or an additional £1,500-£2,000 a year. It will remove the thousands of short-term rentals currently being hosted on Airbnb and others and provide more rooms over a longer-term.
Many older people rely on income from renting a room to enable them to ‘age in place,’ remaining in the communities they know and love. A 2015 study by the Strategic Society Centre found that 80% of older homeowners wished to stay where they are. In the Centre for Ageing Better’s major report with Ipsos MORI — Later Life in 2015 — “they found that having strong social connections help some people to overcome disadvantages such as poor health or a lack of financial security.”
Meanwhile, both young and old struggle to find affordable housing — vacancy rates are low and rent high, particularly in urban centres…