The Rent a Room Scheme is a UK government initiative that allows homeowners and tenants to rent out furnished rooms in their primary residence. Where hosts and guests are living together and would like to continue, this is an excellent option to continue the arrangement beyond the HFU scheme.
Under the Rent a Room scheme, guests would be responsible for paying rent as a lodger. Hosts will not need to pay tax on the income so long as the amount received does not exceed £7500. This limit is on a household basis; is not affected by the number of rooms provided, and includes any contributions to bills and household expenses.
For guests who may struggle to cover the cost of rent themselves, the housing element of Universal Credit is available. For lodging agreements under the Rent a Room scheme this may be calculated using the Local Housing Allowance shared accommodation rate, depending on individual circumstances.
If hosts are renting, they will need their landlord’s permission to sub-let.
The Rent a Room Scheme is not suitable for placements where guests are living in self-contained accommodation, including self-contained annexes. For hosts who are unsure of whether their guest’s accommodation is considered a separate dwelling; please contact your district council’s housing department to enquire.
For more information on renting out a room in your home, please see the following webpages; Rent a room in your home: Becoming a resident landlord - GOV.UK
For more information on the tax-free limit for Rent a Room scheme income, please see the following help sheet; Rent a Room Scheme (2025) - GOV.UK.