Chancellor urged to raise limit on rent-a-room tax break

Property market insiders are calling for the Government to help homeowners struggling to meet mortgage repayments by renting out spare rooms.

The National Landlords Association (NLA) and spareroom.- com say that the Chancellor, Alistair Darling (right) should raise the amount of money that homeowners can earn from renting out a room before tax is due from £4,250 to £9,000 a year. The tax threshold for renting out a room has not gone up since December 1997.

"The scheme has proved a lifeline for many homeowners," said Matt Hutchinson, a director of spareroom.com. "But with rent increases over the past decade, its value has been slowly eroded. With nearly 60 per cent of room rentals in the UK over the rent-a-room tax-free threshold, this reform can only be beneficial."

Three-quarters of people in arrears could cover their debts by taking in a lodger, said the NLA. "There is no way of telling how many potential 'live-in' landlords are not letting out spare rooms because of the hassle of the self-assessment tax form," said David Salusbury, the NLA chairman.