How much of the £39bn in affordable homes will be shared ownership?
"It's vital that we don't see the next generation of homeowners caught up in these issues," says the chair of the Commons Housing Committee in response to a BBC investigation into shared ownership which revealed complaints over costs, transparency and repairs.Florence Eshalomi MP says the committee wants to know how much of the recently announced £39bn government investment in social and affordable housing will be spent on different tenures including the part-buy, part-rent scheme.More shared owners have got in touch with the BBC to express their concerns, including Lee, who says the scheme is a "gimmick".The government told BBC London: "Shared ownership has a role to play in supporting households into home ownership, but we are aware of the challenges faced by some who have entered the scheme."Since the BBC investigation was published, more people have got in touch to talk about their issues with shared ownership, including difficulties in selling.Lee emailed in because he wanted "people to know about the problems before they consider buying one".
He bought 40% of a shared ownership one-bedroom flat in north-west London in 2012. Its value was £174,000 and his share cost £70,000. "It seemed like the cheapest option so I decided to give it a try."But 13 years on, he says he believes the scheme is "a gimmick". He adds: "They make it look affordable but there are a lot of snags that come with it."They glamorise it but in the process of buying they don't tell you the service charge could triple, Section 20 notices."He has been issued with a number of bills totalling about £5,000 through Section 20 notices - formal notifications that a landlord intends to carry out major works - including for one bit of work that involved the painting of a wall in the colours of a housing association's logo. Lee believes that leasehold issues "are intertwined" with shared ownership, which hasn't been a "transparent" option. "Even though you don't own the whole flat, you still get all the obligations as if you own the whole thing.
'The joy has gone'
Lee put his house on the market in July 2024 for £250,000 but after a lack of interest, it was reduced to £215,000 in June.Shared ownership sales are normally subject to a nomination period during which the housing association or landlord has the exclusive right to find a buyer for the home, but Lee managed to have that process waived."I decided the best thing to do is come out. The last six months I've been with a high street agent but I've had no joy. I've had one viewing. Now the only option is to go through quick sell which means I get a lot less money."Lee wants to go back to private renting because "at least you know where you stand".He says it's had a huge impact on his mental health, and "the joy out of living has gone".
Responding to the BBC investigation, Eshalomi said: "It is quite worrying when you see the amount of complaints going to the ombudsman - and 44% for London"I think it is around working with the sector about what steps they are putting in to improve this, and engaging with residents and the transparency of the charges."When you've got people feeling like they're trapped, like they've got nowhere to go to. We need to look at the financial impact this is having on so many people."It's really important that we look at how this has happened and what we can do to help."
As part of the current five-year affordable homes programme due to be completed in 2026, the government is aiming to build up to 180,000 homes for people whose needs are not met by the private market. Some 44,000 to 56,000 of these will be affordable homes for ownership - most of these will be shared ownership.In June, the government announced £39bn of investment for affordable homes over 10 years to deliver on the government's goal of building 1.5 million new homes.While the government has yet to give details, it has confirmed it will "prioritise social rent homes" and "fund other kinds of homes including shared ownership and affordable rent". Further details will be published shortly on the tenures of homes and the schemes the investment will fund, as well as the timeline for opening bids.Sue Phillips from Shared Ownership Resources, a project championing the interests of shared owners, says the homes on the scheme "come in a variety of forms, with different levels of risk and benefit".She adds a "lack of national data and robust, independent research on long-term outcomes for different demographics" makes it "more challenging to identify precisely what role shared ownership should play in the new £39bn Affordable Homes Programme".
'Concrete steps'
Jo Short from the Shared Ownership Campaign, which educates and informs potential buyers, says the scheme "won't be for everyone, but it provides a way to take a step on to the property ladder for those locked out of the open market. It is an option to consider when the only alternative is renting privately."The introduction of Key Information Documents for every shared owner, along with two-factor affordability assessments and greater flexibility all ensure that shared ownership will continue to evolve."
A Ministry of Housing, Communities and Local Government spokesperson said: "Shared ownership has a role to play in supporting households into home ownership, but we are aware of the challenges faced by some who have entered the scheme."We are considering what more can be done to improve the experience of shared owners, alongside consulting this year on implementing measures to drive up transparency of service charges."Tom Copley, the deputy mayor of London for housing and residential development, said: "The mayor has taken concrete steps to support the affordability of shared ownership homes for Londoners, including using planning powers to determine that housing costs for shared ownership should not exceed 40% of a household's net income and setting best practice for housing providers in managing service charges."We will continue to work with the government to ensure there are greater protections for Londoners who have bought their homes through shared ownership and that London has the share of funding it needs to deliver more new social and affordable homes."
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Have you ever rented out a room in your home to a lodger? We'd like to hear from you. Email money@ If you have a spare bedroom in your home, the Government's rent-a-room scheme could be an extremely tax-efficient way to boost your income. The scheme allows you to earn up to £7,500 tax-free per year, completely legally, and regardless of your personal income tax bracket, simply by taking a lodger into your home. It's a welcome boon to those seeking a supplementary source of income and who have a spare bedroom gathering cobwebs. Designed to encourage homeowners to make better use of underutilised space, the scheme has the ability to turn your spare bedroom into a profitable financial asset, provided it is furnished and within your main residence. But while this may sound straightforward, making use of the scheme and letting someone into your home can be anything but. For instance, who is eligible for the scheme, do you need to inform HMRC and what happens if you exceed the £7,500 limit? 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What is the rent-a-room scheme? The rent-a-room scheme is a longstanding government initiative that permits homeowners or, in some cases, tenants, to earn tax-free income by having a lodger rent a room in their property. The income is capped at £7,500 per year, so if you share rental income with another person, then the threshold is split in half to £3,750 each. The first iteration of the scheme was introduced in 1992 as rent-a-room relief, aiming to 'incentivise individuals to make spare capacity in their homes available for rent'. It was an attempt to increase the supply of affordable housing and encourage the efficient use of residential space, especially in high-demand areas like London and other major cities. Matt Hutchinson, director at the flat-share site SpareRoom, notes a significant rise in lodgers since the pandemic: 'Landlords still make up the largest share of ads on SpareRoom (26.4pc), but homeowners are close behind at 22.3pc. 'Lodger numbers dropped during the pandemic, as people were more wary about having people in their homes, but we've since seen a sharp increase in homeowners advertising rooms – up 38.4pc between January 2022 and 2025.' Example A homeowner rents out a spare bedroom for £500 per month, which comes to £6,000 per year, well below the tax-free threshold. Therefore, they pay no tax on this income and don't need to inform HMRC. Who can use the rent-a-room scheme? The rent-a-room scheme can be used for more situations than you may think. To qualify, you can be either a resident landlord or a tenant in rented accommodation. Here are some aspects that must apply: Main residence: The property must be your primary home, where you live. You cannot claim the relief if you're renting out rooms in a property that isn't your main residence. Resident landlords: If you own and live at the property, you are considered a resident landlord and can therefore rent out a room and benefit from the scheme. Tenants: If you rent the property you live in, you can be eligible for the rent-a-room scheme, provided you have express written permission from your landlord. Furnished accommodation: This is an essential piece of criteria; the room you rent out must be furnished. Unfurnished rooms do not qualify for the scheme. Short-term lets: You can use the scheme for short-term rentals as long as the property remains your main residence. This means you can benefit from the scheme even if you run a bed and breakfast or advertise a room on Airbnb. While the scheme can be used for short-term lets, homeowners should be mindful of local regulations. Chris Norris, of the National Residential Landlord Association (NRLA), said: 'Provided the homeowner has the right to sublet, there should be relatively few legal risks. There are some areas where the amount of time that a property can be subject to a short let is limited, though – this is the case in London [where there is a limit of 90 nights]. In those cases, a landlord would need to be cautious about breaching planning rules.' Ineligible scenarios Certain situations disqualify you from using the scheme: Second homes: The room must be located at your main residence, not a second home. Also, if you live abroad and rent out your UK home, you cannot claim the relief. Separate properties: If the room is in a separate building from your main home, such as an annexe with its own entrance, it doesn't qualify. Homes converted into separate flats are also ineligible. Business use: Rooms used primarily for business purposes, like offices, are excluded. How rent-a-room tax relief works The way the rent-a-room scheme tax relief works is remarkably simple, especially if you are earning below the £7,500 threshold through rent paid by any lodgers. However, making sure you follow these rules correctly is still essential to ensure everything remains above board. Automatic tax exemption The reason the application of tax relief through the rent-a-room scheme is so simple is that it's automatic. In other words, if you earn below the £7,500 threshold through this form of income, you do not have to alert HMRC or even submit a tax return (providing you do not already have to submit one due to other income sources). However, it is still strongly recommended to keep records of your rental income in case HMRC requests it. Earning above the threshold If you generate enough rental income to exceed the £7,500 threshold (£625 per month), then this additional income will need to be declared in your self-assessment tax return. In this case, you'll need to indicate that you're opting into the scheme, which will be an option on the tax return. The amount you earn over the £7,500 threshold will be taxed depending on your personal income tax rate, i.e. how much you earn through all income sources. For instance, if you are a basic-rate taxpayer, you will pay 20pc on any income generated above the threshold, provided you have opted into the scheme. Expenses One thing to consider before claiming rent-a-room relief is expenses. You can't deduct allowable expenses and benefit from the rent-a-room scheme at the same time, so you'll need to weigh up which option will be most tax-efficient for you. The two options for tax relief are: Claim rent-a-room relief: Pay tax on the gross income that exceeds the £7,500 threshold, without deducting any expenses. Actual profit basis: Pay tax on your actual profit, which equates to total rental income minus any allowable expenses such as maintenance, utilities, insurance, etc. Example 1 You earn £10,000 in rental income and have £2,000 in expenses: Claim rent-a-room relief: Taxable income = £10,000 – £7,500 = £2,500 Actual profit basis: Taxable income = £10,000 – £2,000 = £8,000 In this example, claiming rent-a-room relief is far more profitable. Example 2 You earn £10,000 in rental income but have had to pay £3,000 on a new boiler and another £5,000 on structural repairs. Claim rent-a-room relief: Taxable income = £10,000 – £7,500 = £2,500 Actual profit basis: Taxable income = £10,000 – £8,000 = £2,000 In this example, claiming expenses reduced your taxable income by £500. Remember, you can always choose the more tax-efficient method at the end of the tax year, depending on any expenses you've incurred throughout the year. Lodgers vs tenants: legal differences and implications There are some distinct legal differences between tenants and lodgers. Tenants have more rights, whereas for lodgers, the arrangement is typically more flexible. Mr Norris clarifies the fundamental distinction: 'I think the most common misunderstanding is that a lodger in someone's home is not a tenant. They have a licence to occupy part of the property, which does not imbue the same rights or security as a tenancy. Landlords still have a responsibility to provide a safe home, but the arrangement is different.' With a lodger, landlords can: Retain access to the room, whereas they need permission to access the property when a tenant is renting it Receive a deposit without entering it into a deposit protection scheme, which is required for tenants Be on the hook for council tax, whereas tenants are typically responsible for paying this. Evicting a lodger One of the main benefits of having lodgers rather than tenants is in relation to eviction. Evicting a tenant can be an arduous process, which is to get even more difficult when the Renters Rights Bill is introduced. For lodgers on the other hand, landlords can terminate the agreement by providing 'reasonable notice', usually in line with the rental payment period. The amount of time you need to provide is dependent on whether they are an 'excluded occupier' or have basic protection. However, resident landlords should still be aware of the potential challenges. Mr Norris cautions: 'Resident landlords have to be very aware of their own safety and security, and just because you have the legal right to ask someone to leave doesn't mean that there are not risks involved or that the lodger will necessarily comply.' According to government guidance, the lodger is considered an excluded occupier if 'you or a member of your family share a kitchen, bathroom or living room with them'. Citizens Advice says, the notice period for an excluded occupier should be the same as the 'rent period'. If you do not share these common areas with your lodger, you will have to get an order from the court to evict your lodger. One thing to be aware of is that a lodger can automatically become a tenant if you move out of the property, in which case your legal obligations would change. Health and safety obligations As a landlord, benefiting from the rent-a-room scheme or otherwise, you are still responsible for ensuring the property is safe and habitable. This includes the following legal obligations: Gas safety: Annual checks by a Gas Safe registered engineer. Electrical safety: Regular inspections and maintenance of electrical installations. Fire safety: Installation of smoke alarms on each floor and carbon monoxide detectors where applicable. Furniture compliance: All furniture provided must meet fire resistance standards. If you are a homeowner, taking in a lodger can void your mortgage terms if you don't inform you're provider first. It can also void your home insurance policy, so be sure to check the conditions. Paula Higgins, of the Homeowners Alliance, also advised homeowners to make sure they've factored in the full financial implications of taking in a lodger beforehand. 'When you're thinking about the finances, remember to factor in all the costs,' she said. 'The rent you charge will need to cover the increase in your utility bills. Crucially, if you currently live alone, you will lose your 25pc single-person discount on council tax, so it's vital to build that into your calculations to ensure the arrangement is financially worthwhile.' How to find the right lodger in six simple steps Once you've decided to take in a lodger, finding the right one can be a daunting task. Here, we've outlined six simple steps to guide you through the process. Steps 1-3: Finding a lodger Define your ideal lodger: Before jumping into the search process, make sure you know exactly who you're looking for, and what kind of person aligns with your lifestyle. For instance, if you are an early riser who typically likes to be in bed early then this is probably something you will value in a lodger. Create a compelling advert: By determining exactly the kind of person you're looking for in step 1, you will be able to craft the perfect advertisement for your spare room. Highlight key features of your property, such as location and amenities (high-speed internet, for example), and set out the house rules and what you're looking for in a lodger to filter out inappropriate applicants. Include high-quality images to show your property in the best light. Make use of multiple advertising channels: Don't feel limited to just one online platform. These can include but are not limited to: dedicated flat-share portals like SpareRoom and Roomies, social media forums, community boards like a local gym or cafe and educational centres if you're open to housing a student. You can also use platforms like Airbnb for short-term rentals. Steps 4-6: Screening potential lodgers Conduct thorough interviews: A potential lodger may look great on paper, but you won't really know without meeting them in person. Conduct a thorough interview with candidates to get a feel for your compatibility as housemates. Perform background checks: Make sure to request references from previous landlords or employers to validate their credentials. You can also conduct credit checks to clarify their financial stability. It is a legal obligation to check if they have the right to rent in the UK. It is of vital importance to ensure that your screening process is as thorough as possible. Ms. Higgins said: 'It's not just about ticking boxes; it's about making sure their story adds up. Take the time to check employment details and follow up on references. Ask yourself, why are they looking for a room right now? Are they a young professional starting a new job, or a student here for a few months? A clear and plausible story is a good sign. Don't be afraid to trust your instincts if you spot any red flags.' Establish a clear agreement: Draft a written lodger agreement outlining the terms of the arrangement, including rent amount, payment schedule, notice period and house rules. This sets a precedent for the relationship and can prevent future misunderstandings. Miss Higgins outlined why a clear agreement can be invaluable: 'Clear communication from day one is the absolute key to a successful lodging arrangement, and that's precisely why a written lodger agreement is so valuable. It's the foundation for managing expectations. 'Be specific about the practical, day-to-day things to avoid future conflict. For example, what are the rules around using the kitchen and where should things be stored? What is the policy on overnight guests? Even small details, like a personal preference for no candles in bedrooms, should be included. Getting this all in writing prevents misunderstandings and ensures everyone feels respected.' Conclusion: Making the most of the rent-a-room scheme The rent-a-room scheme represents a tax-efficient way to boost your income. This can be especially beneficial when entering into retirement should you want to supplement your pension income. But the appeal of the scheme extends across different age groups. Mr Hutchinson said: 'While renters in their late-20s and early-30s still dominate the flatshare market, over-65s using SpareRoom have increased elevenfold in the past decade, and over-55s have tripled, showing how the cost of living is affecting all age groups.' Miss Higgins, who has used the scheme herself, believes the benefits can be personal as well as financial. 'I've rented out a room a few times, and it was a huge help with the mortgage when we first moved into a bigger house. But it's more than just income. There's a sense of security from having somebody else in the house when you're away. Rent-a-room scheme FAQs
