'Rent a room' tax break introduced in Jersey

Wednesday 04 January 2023

Homeowners are being encouraged to let out spare rooms in return for a tax break as part of a newly launched scheme to tackle the housing crisis.

Under the Government's 'Rent A Room Scheme', homeowners can receive tax relief on rent that they receive for letting a bedroom in their own home from 1 January 2023, provided the total gross income does not exceed £10,000.

Housing Minister Deputy David Warr, said: "The 2021 Census found that around one quarter of households were underoccupying their accommodation, and this initiative is designed to encourage those empty bedrooms to be used.

"The scheme builds on the current tax treatment of lodger income and I am confident that it will lead to an increase in accommodation for people seeking somewhere to stay for a relatively short time. That might be foreign language students, or workers in Jersey for short-term contracts, or islanders who just need a bedroom.

"Whoever it is, they are likely to feel more welcome, and more in touch with island life, if they're staying in someone's home."

Pictured: Minister for Housing and Communities, Deputy David Warr.

The Rent A Room scheme was previously welcomed by St. Brelade's College, an organisation which has managed the placement of overseas students in local homes for around 45 years.

The local language school has been calling for islanders to get a tax break when renting a spare room in their home for many years, after seeing the number of lodgings available for their students drop by a third over the last decade.

Pictured: St. Brelade's College provides English courses to international students who also take part in extra-curricular activities and spend time with their host families in the evening to fully immerse themselves in island life.

Sid Brown, Principal of St Brelade's College, explained: "In our experience, many prospective hosts are deterred by the fact that they have to declare and pay tax on the income, possibly because they are scared they may fall foul of the tax department and are often unaware that there is a 50% reduction in the tax rate if they provide meals.

"In simple economic terms, the fewer home-stay places we have, the fewer students will come to Jersey resulting in less income for local households, teachers and suppliers not to mention airline and ferry operators. In our view, this scheme will result in a net gain by increasing capacity while at the same time eliminating the totally unnecessary administrative costs of overseeing this tax."

Mr Brown added: "We look forward to welcoming new hosts to take advantage of this scheme and find out more about the wide range of financial and non-financial benefits involved in hosting."

The new initiative is one of several ways the Government is seeking to address the housing crisis.

In November, Deputy Warr said he was looking to clamp down on homes being used as AirBnb properties.

The following month, he published an 'Action on Vacant Properties' plan, which listed an annual charge levied against vacant properties and the Government using compulsory purchase powers to bring vacant properties onto the local market among the "drastic" measures under consideration.

How the scheme works:

The scheme, which is part the Government's wider programme to address Jersey's accommodation shortage, enables homeowners to receive tax relief provided that:

• the total gross income does not exceed £10,000;

• the room is not rented to a family member;

• the room is in the homeowner's main residence, and is not a self-contained unit; and

• the lodger is over 18 or placed in the room by an appropriate organisation if they are under 18.