Renting out a room or property for just 36 nights a year earns the average Airbnb host lb3,100, according to the rentals site.
Airbnb, which celebrated its 10th birthday in August 2022, currently has 223,200 active listings in the united kingdom.
So, would you get a slice of the profits? And if you do, what might it mean for your tax bill and your mortgage?
Which? explains what you need to bear in mind before letting with Airbnb.
How to become an Airbnb host
The process of listing your home on Airbnb is pretty easy. You have to register with the site by giving your email address and establishing a password.
You may then create a profile for your room or property, specifying the location, type and capacity. You may also upload pictures and decide whether you need to be able to approve prospective guests before they can create a booking.
When creating your profile, make sure to consider:
Will you have to pay income tax on your Airbnb earnings?
The amount of tax you pay from Airbnb profits is determined by how much you get and just what you're renting.
If you're renting out an area inside the property you reside in, you may make utilisation of the rent-a-room scheme. This allows you to earn as much as lb7,500 in every tax year from letting out a room in your house without paying tax onto it.
Any income above lb7,500 is going to be taxed, and you will have to submit a self-assessment tax return to HMRC. You need to subscriber to the scheme in order to claim the allowance.
If you're letting an entire property – or you don't opt in to the rent-a-room scheme – you'll pay tax through self-assessment.
Rental income is taxed in your profits, so you will need to bring your earnings and then deduct your expenses. These may be things such as spending money on building insurance, accounting fees and cleaning.
You can also be capable of taking advantage of the ‘property allowance‘, where one can earn as much as lb1,000 tax-free from your property. This can not be used at the same time because the rent-a-room scheme, but could cover money you are making from renting out your driveway or garden, or hiring out your lounge for filming in order to let people watch an outdoor event.
How long are you able to let for?
In the UK, Airbnb hosts in Manchester are not permitted to let their property for more than 3 months a year. This is applicable to entire properties, and it is enforced by Airbnb.
To rent it out for over this, you likely will need 'material change of use' planning permission for your local authority – and Airbnb will need evidence of this prior to the limit is extended.
Properties in England and Scotland is going to be deemed as self-catering – and for that reason subject to business rates – if they’re available to let for 140 days or more per year.
If a house in Wales can be obtained to allow for 140 days or even more, or is actually let for 70 days or even more, it will likewise be susceptible to business rates.
Properties in Northern Ireland may need certificates from Tourism NI – this is essential for anyone providing 'tourist accommodation'.
You’ll require a certificate if the rental suits the types of tourist accommodation – a bed and breakfast, for instance, is really a rental that offers overnight accommodation along with a cooked breakfast.
Do you need special insurance to become an Airbnb host?
Airbnb's own insurance – the host guarantee – hides to $1m (lb785k) of harm brought on by guests. However, cash and securities, pets, personal liability, shared or common areas and high-value items for example jewellery, collectibles and artwork are all exempt.
Most home insurance policies won't cover renting out rooms as standard. Some insurers may accept cover you based on whether you're renting out an area or a whole property, how often you're planning to book, the amount of people staying, and your previous claims history.
With this in your mind, it could be worth contacting a professional broker to locate a suitable policy.
Will you need to improve your mortgage?
If you're changing the use of your home you should inform your mortgage provider.
Breaking the terms of your mortgage could mean you'll get fine, or (in rare and extreme cases) the lending company could order repossession.
If you let a room in your home
Renting out a room within the property you live in shouldn't require you to change your residential mortgage.
However, you might have to think about whether you'll need to pay tax around the income you receive, as stated before.
If you have a leasehold property, you may need to seek advice from your freeholder before you start letting it out, as some leases ban this.
If you let an entire property
The terms of some residential mortgages don’t allow letting on Airbnb, so you'll need to check this with your lender.
There are a few lenders who'll accept applicants who want to discrete their property via short-term websites like Airbnb.
Tipton & Coseley launched a residential mortgage last August for a vacation home that may be discrete with an Airbnb basis for a limitless period.
You might be also able to apply for 'consent to let', where your lender allows you to let but remain on your existing mortgage.
However, often they'll wish to move you onto a buy-to-let mortgage. It is because buy-to-let properties present more risks to lenders as you'll usually be relying on rental payments to pay your mortgage.
There are usually tougher affordability criteria and better rates on buy-to-let mortgages, so make sure you consider all of the factors prior to committing.
Get the right mortgage for you
Finding a home loan deal to suit your circumstances may appear as an overwhelming task, particularly when there are numerous factors to take into consideration.
A whole-of-market mortgage broker can help get the best deal for you, in addition to allowing you to come up with a plan if you aren't quite prepared to apply yet.
