‘Second Liverpool’ found hiding in the spare room

Where-is-Liverpool

We desperately need another Liverpool.

There’s nothing wrong with the one we’ve got, we just need another. Right now. We also need another every year for the next 25 years. That’s a lot of Liverpools.

But let’s start with why we need one.

There’s a housing crisis. It’s a fact. We need to build 250,000 houses every year, enough for 460,000 people. That’s basically the population of…you guessed it… Liverpool.

We don’t build anywhere near that and we’re not about to. Last time we did was 1979-80.

Even if we could build a new Liverpool every year, where would we put it? Wouldn’t it just be easier if we had a spare Liverpool lying around?

As it happens, we do.

England’s homeowners have 19 million empty rooms between them. If we can persuade just 2.5% to rent them out they’d house 475,000 people. That’s basically the population of…you guessed it… Liverpool.

We could do that right now, with a decent incentive.

And we’ve finally got one.

As of April 6th people can earn £7,500 a year tax-free by renting out a room. It doesn’t just apply to homeowners – tenants can do it too with their landlord’s permission. It took us six and a half years to convince Government but they finally did it. Sounds like a decent incentive doesn’t it?

It’s a proper win-win. Tenants benefit from increased supply of affordable rooms and homeowners get a tax break to encourage them to open their doors.

Now, has anyone got a spare Manchester knocking about?

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You can find out more about the Rent a Room Scheme and how it works here.

How to solve the Housing Crisis in London

SpareRoom attended the Future of London Housing debate hosted by the Evening Standard on Wednesday 20th March, in a packed room of over 1000 attendees. Housing is clearly a subject that is close to the hearts of many Londoners and the debate and following Q&A session became quite heated – showing the passion and emotion involved.

All of the panellists, including thinkers and politicians from all sides of the political spectrum, agreed that more housing supply was needed to relieve the housing crisis enveloping London. Deputy Mayor for Housing, Richard Blakeway called for London’s share of stamp duty to be ploughed back into a massive house-building programme. Whilst the MD of Berkeley Housing proposed a simplified planning process, the former London Mayor, Ken Livingstone’s call was to provide council housing for mixed communities, so there is less segregation between rich and poor in London. Alain de Botton, philosopher and writer, suggested a blueprint for attractive, affordable design that could be repeated easily and efficiently across London, removing some of the hurdles in the planning process, whilst the broadcaster and architectural graduate Janet Street Porter called for high density building, across railway lines and over car parks, like in New York. Possibly the biggest applause of the evening went to Evening Standard columnist Rosamund Urwin’s suggestions of disbanding Foxtons, banning Kirsty Alsopp and deporting the Candy Brothers. Standing up for ‘renty-somethings’ she focused on her own case of being shut out of home ownership, and renting with family members.

Whilst many of their suggestions were valid and probably will help to resolve the housing crisis in a few years to come, if more intensive building programmes do get underway (we’ve only built half the number of homes we need for the last 20 years and have a lot of catching up to do), there was a distinct lack of focus on the here and now. With so many thousands of people on housing lists in London, and the capital attracting workers and students like never before, there is an imperative need to offer practical solutions to today’s housing crisis, before London becomes a place that no real people can afford to live and work in.

Sharing existing resources seems to be the elephant in the room that nobody would mention. Amongst the talk of pressing empty properties and even offices into homes for the needy, there is no mention of the thousands of under-occupied properties that can help to ease the crisis. This is already happening – as teenage children grow up and move away, ’empty nesters’ are starting to rent out their spare rooms in their thousands – but we need to see more of this, to make an impact. What could the policy makers do to help encourage this trend?

We would suggest a raise in the tax free limit homeowners can earn through the Rent a Room scheme for starters – it’s been at the same rate since its introduction in 1997, whilst rents have been rising dramatically. Why not make it more attractive for people with spare rooms to take in a lodger, and help to remove the pressure on the limited supply in the private rented sector, and the social rented sector too? We’ve been pushing for this with our Raise the Roof campaign for some time, and hope that the Chancellor may see fit to increase the tax benefit in his next budget, even if it wasn’t included in last week’s.

Other ways to increase supply include removing some of the hurdles involved in turning a property into an HMO. This will promote more efficient use of existing property, and help young people to find somewhere affordable to live in the here and now, rather than being told to wait for houses yet to be built.

Do you agree? What do you think could be done to help solve the housing crisis sooner, rather than later?

Supporting Social Tenants during the introduction of Welfare Reforms

The Chartered Institute of Housing today launches a new guide aimed at helping its members deal with some of the issues raised by Welfare Reform, and in particular, the Bedroom Tax or Social Sector Size Criteria.  The rules come into force next April, and will mean that social tenants of working age with a spare bedroom or two will lose some of their housing benefit.

One of the options for impacted social tenants to cover the shortfall is to rent out a room, which will also serve to bring in extra income for the household.

SpareRoom has over a decade’s experience in helping people through the process of finding lodgers, and are pleased to be able to share some of our expertise. Beyond offering a marketplace to advertise for lodgers, we also provide information and guidance on many other aspects of the process including: who you need to inform, how to interview lodgers and what kind of house-rules to put in place.

The CIH worked with SpareRoom to produce ‘How To Support Tenants to Find a Lodger’, the latest in a series of How To guides.  It explains clearly and succinctly the ways that councils and housing associations can support their tenants in exploring the option of getting a lodger. As well as highlighting the changes coming into force, the guide sets out how social landlords can benefit from putting together a strategy to help tenants find lodgers, covers legal matters, financial matters including the impact on tenants’ benefits, and offers links to further resources such as lodger agreements, advertising tips and the Rent a Room Scheme, whereby anyone can earn up to £4250 per year tax free by renting out a room.

Practical suggestions cover how to communicate the options to tenants, as well as how to support tenants through the process of finding a lodger. In “Learning from others” the CIH highlights proactive organisations and what they’re doing to support their tenants to rent out their spare rooms.

‘How to support tenants to find a lodger’ is available for free download  from the Chartered Institute of Housing. Find out how to get a lodger to cover the bedroom tax shortfall.

Options for social tenants facing the Bedroom Tax

Changes to benefits are coming into force on 1st April 2013, which will affect the housing benefit entitlements of thousands of social tenants up and down the country.

Housing associations and local authorities have started to inform their tenants of the changes and their expected impact, but there is still much to be done to help social tenants make informed decisions about the changes and how to mitigate their impact.

New rules on under-occupancy will mean that people will receive less housing benefit to cover their rent, if they are deemed to be under-occupying their home. The government is seeking to save money and at the same time, encourage those with homes too large for their immediate needs to move to smaller homes, vacating the larger ones for growing families.

The under-occupancy rules will affect an estimated 670 000 households next April, and there are not enough alternative one bedroom properties for under-occupying couples and singles to move to.  In some parts of the country, particularly the North, the impact is likely to be felt more strongly, as a greater proportion of social housing stock is larger, due to fewer restrictions on space.

The average cost for each under-occupying tenant will be £676 per year, based on an expected £14 per week shortfall in housing benefit. When the welfare reform kicks in next year, tenants will face tough choices between paying for the shortfall in their rent through income, or downsizing. An alternative to this tough conundrum is for the tenant to take in a lodger. With their spare room filled in this way, they won’t be deemed to be under-occupying, and they have the capacity to make some additional income, whilst remaining in their own home.

Some local authorities and housing associations are starting to develop strategies to support tenants who wish to consider taking in a lodger. The tax and benefit implications are not straightforward, and it’s vital that social tenants get help to consider the wider implications of having someone unrelated to them living in their home.

SpareRoom has published The Social Tenant’s Guide to Taking in a Lodger, which is available for free download, and is intended to guide individuals through this potential minefield. Housing associations may also use it as part of their efforts to support tenants in their choice of action in response to the Bedroom Tax.

To download the free guide, visit http://www.spareroom.co.uk/bedroomtax

How to offset the shock of an increase in SVR

More than 1 million UK homeowners got a shock last week when 4 mortgage providers (Halifax, the Co-operative Bank, Clydesdale Bank and Yorkshire bank) increased their standard variable rates. NatWest also pushed up the rate on its One Account, affecting a further 100,000 customers.

With many homeowners already living on frozen salaries, and with tightened belts, this further increase in outgoings could be critical.

The general advice in this situation is to speak to your mortgage lender in the hope that they may be able to help. The earlier you let your mortgage lender know if you think you’ll struggle the better.

One practical way to offset increased outgoings is to take in a lodger. Not only will the £4,250 you can charge tax free under the Rent a Room Scheme be a huge help in these circumstances, you may also benefit in other ways. Having someone to water your plants or feed your pets while you’re away, for example. Friendship is often a happy consequence of taking in a lodger, and we’ve even heard about one or two marriages that resulted from it too!

Make sure you speak to your mortgage provider first, but taking in a lodger could give you the breathing space you need as SVRs increase. Visit http://www.spareroom.co.uk/lodger for more information.

Raise the Roof campaign update

After more than a year of campaigning for an increase to the Rent a Room Scheme tax threshold it looks like this won’t be happening any time soon. We always knew it would be tricky to convince the government to tackle this issue head on but, despite a negative outcome, there has been much to be proud of.

Not only did we manage to bring the issue to the attention of the housing minister (both the current minister and his predecessor) we also had the opportunity to meet with Treasury officials and make them aware of the need for change, even if that change doesn’t happen now. In a time of severe cuts across the board it was always going to be tricky to get this through.

We’d like to take this opportunity to thank every single one of you who signed our petition, urged your MP to sign the EDM and helped us with anecdotal evidence. We’d also like to thank Shelter, Sarah Beeny, The National Landlords Association, Landlordzone and Zoopla for their support for the campaign.

Having made inroads and helped raise awareness this is an issue we will be returning to – after all, the out of date tax allowance will only become further undervalued as time progresses.

In the meantime thanks to all of you, we really do appreciate your help.

Cheers

Matt

40 MPs back Raise the Roof – so far…

Support for EDM 860, which backs the Raise the Roof Campaign, is growing. So far 40 MPs have added their signatures to the list with Labour topping the party list at this point.

Totals for the main parties are:

  • Labour 19
  • Lib Dem 8
  • Conservative 5
  • others 8

See whether your MP has signed the EDM – mine has, and I got a reply to my letter telling me he was going to!

MP for North Devon, Nick Harvey, has gone a step further and issued a press release stating his support for the campaign.

Cheers

Matt

A question for the housing minister

We attended a lecture given by Housing minister John Healy last night as part of the New Thinking for Britain’s Next Decade series, run by Labour Progressives. As often seems to be the case with discussions about housing there was plenty of talk about both public and private rented accommodation but nothing about shared accommodation. Luckily there was a short amount of time at the end for questions so I asked the minister why we didn’t hear about shared accommodation as an option and, with this in mind, did he agree with the call to raise the Rent a Room Scheme threshold to help people avoid repossession whilst sending a positive message about shared accommodation as an option.

Mr. Healey replied that one of the things he liked about these meetings was that there was always something he wasn’t expecting to hear about – in this case shared accommodation – and asked for more information. Luckily we were prepared and had a copy of our briefing document for MPs and the Treasury with me (although I had to pursue him down a corridor on his way out to a TV interview to give it to him). We’ll also be emailing him a copy today.

Hopefully this will get our concerns some attention and, at the very least, make the minister aware of the problems as we see them.

Also…a quick note to say we’ve passed the 4,000 signatures mark for our petition to raise the Rent a Room Scheme threshold so thanks to all of you who’ve signed. We’ve never run a campaign like this one before but 4k seems like a healthy figure for the first couple of weeks.

Many thanks

Matt

LandlordZone add their support to Raise the Roof

Residential property website LandlordZone.co.uk have added their support to SpareRoom’s Raise the Roof campaign.landlordzone

The site’s director Tom Entwistle says:

“The Rent-a-Room Scheme was sent up as a way of encouraging home owners to take in lodgers. This is an eminently sensible idea as it not only encourages better use of the national housing stock and minimises the housing shortage, it also provides accommodation for, in particular, students and young singles, and it helps considerably with labour mobility. However, government in their wisdom have failed to see a need to raise the allowance from its 1997 amount of £4250, which in today’s real terms should be considerably more. LandlordZONE fully supports the campaign to increase this now derisory allowance.”

LandlordZone also covered the campaign on their news pages yesterday

How to rent a room part 2

OK, so, in the first part of out guide on renting out a room in your home we looked at basic preparation – who you should inform before you take anybody in. This time we’ll look at the room itself and the property. The 3 main issues we’ll look at are:

  • preparing the room
  • preparing the property
  • setting your rent

The room

Furnished or not

One thing we need to make clear at the outset is if you’re renting out a room under the Rent a Room Scheme, it must be furnished. That doesn’t really need any explanation does it? Unfurnished rooms don’t qualify under the scheme – simple as that. You’ll also need to de-clutter the room as nobody will want to rent your room if you’ll be wandering in every time you need something you’ve stored on top of their wardrobe or under the bed. It’s a good idea to de-clutter before you show people round rather than saying ‘oh yeah, all this will be gone before you move in’ as it’ll help make the room look bigger if it’s empty apart from furniture.

Single or double?

If at all possible it’s a good idea to put a double bed in the room as most people prefer a double to a single. If the room is small thought it might be best to stick with a single as you’ll need to leave enough room around it for someone to get in and out. You may find if you rent to a student that they’d prefer a single and a desk as they’ll most likely have work to do in the room. Whether you advertise as a single or a double can be open to debate (especially if the room is somewhere in between) but we’ll come on to that in a later post.

The property

Kitchens and bathrooms

In a recent interview we did with Sarah Beeny she gave the following advice to anyone looking to take in a lodger:

I think the most important thing is to make sure your kitchen and bathroom are really clean because there’s nothing more grim than someone else’s dirt in the kitchen or bathroom!

Gas checks and safety

You need to make sure that your gas appliances are maintained and in good order. You must have them checked annually by someone who is registered with the Gas Safe Register. Fire regulations only apply if the property isn’t your main residence. You should fit smoke alarms as a matter of common sense and make sure you test them regularly.

Setting your rent

It’s always a good idea to check the market in your area to see what a room is worth before setting your rent. There’s no point in either pricing yourself too far above or too far below other rooms.

The two main ways of doing this are:

  1. Check your local area on SpareRoom.co.uk to see what other people are charging. Just type your postcode into the search box and see what else there is nearby. This will also help when it comes to writing your ad later on as you can get a sense of which ads you’d be most likely to respond to if you were looking for a room
  2. Download the latest Room Rental Index and see what the averages are in your area. Obviously there will be rooms well above and below the averages but the index, especially the postcode level one, should give you an idea of where to start and also an indication of how strong demand is likely to be. Don’t forget, the averages in the index are for double rooms including bills

In the next posts we’ll look at sorting out a contract, taking a deposit, agreeing terms before your lodger moves in and how to advertise your room.

Matt