I guess it depends on your LCTR scheme. But the students are not boarders with individual agreements between them and the host. The host is paid an income for a number of international students, there are not usually directions on what they have to provide for that payments other than the basics (bed, bathroom use & food) and the amount is a set figure per student, a figure set by the organisation. The host cannot charge what they like. On that basis I would say this is taxable income.
