Recently, there has been a noticeable rise in the number of enquiries from homeowners who have expressed more than a keen interest in the Rent-A-Room Scheme. It spells good news for international students, of course, as it ultimately means a continuing supply of affordable, quality homestay accommodation. Major leading agency providers carefully vet all potential hosts and the rooms offered according to British Council approved guidelines.
It’s also a win-win for eligible hosting families as well as their future guests from overseas. The additional household income is sure to be much welcomed. The latest available Consumer Prices Index, which includes owner occupiers’ housing costs (CPIH) currently hovers around 2.6 per cent, higher than mid-2013. Since that time, the continuing fall in “real” wages continues to raise concern, not least among householders as they experience the effects from the rise in living costs, such as food, utility bills, council tax, and mortgage payments.
It’s a situation that some international students, who may be shortly arriving in the UK in the hope of finding a place to stay while studying, may quickly find presents a challenge. High street monthly rents for furnished accommodation in some University towns can range from £1,850 to £2,300 or more plus the cost of utility bills (gas, electric, etc), which can be anywhere from around £160 to £200 per month.
By comparison to the prohibitively rising costs in renting from private landlords or high street estate agents, the reasonable price tariffs of a hosted homestay under the Rent A Room scheme looks an even more compelling option. Homeowners whose own children may no longer be living under the same roof also see the attractions of making practical use of a spare room. A common theme is the wish to offer assistance to young, growing minds from wherever they were born in the world to be able to study and learn in Britain. Many considering room hosting are themselves, teachers, lecturers or in the caring professions.
Financial incentive to would-be homestay hosts
Recently, the government has provided its own financial incentive to would-be homestay hosts. Under the Rent a Room Scheme, a householder can now earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in their home. This is halved if the income is shared with a partner or someone else. The income earned from the rent-a-room scheme is considered the result of providing ‘residential’ accommodation, not ‘guest’ accommodation.
The room is effectively being used by the student as “a home on a long-term” basis, either on its own or included with other parts of the house. This is different from provision of accommodation to guests for short periods as guest accommodation, which would be taxed as business income and not qualify for ‘rent-a-room’ relief.
In other words, a key requirement of the scheme is that the room must be in your main residence and be furnished. The student can occupy a single room or an entire floor, but it must be part of your home, i.e. kitchen and bathroom facilities should be shared.
Tax exemption is automatic if your earnings are less than the threshold
Opting into the Rent A Room scheme can also take place at any time if you are a resident landlord, whether or not you own your home, or you run a bed and breakfast or a guest house. However you can’t use the scheme for homes converted into separate flats.
International student hosting does, however, allow you control and flexibility over the services you provide. Study courses can vary in length and some students may only require a room for just a few weeks if they’re studying on a short English Learning course or attending a summer school. However, the more usual arrangement for most students and homestay accommodation providers tends to be along the lines of ‘Half board’ or ‘Full board’ with a student living as part of the family.
There may be no need for any extra paperwork! The tax exemption is automatic if your earnings are less than the threshold but a tax return must be completed if earnings are more than the threshold. By opting into the scheme, your tax-free allowance can be simply claimed on the tax return. Alternatively, if you choose not to opt into the scheme, you will however be required to record income and expenses on the property pages of your tax return.
Enquiries about the availability of homestay accommodation can come at any time, but especially in the months, weeks or even days before a new college term begins. With the steady climb of inflation, gas and electricity charges, food and fuel prices, now may be just the right moment to get that spare room ready!