Airbnb Rules and Short-Term Letting in London

Thinking of turning your London home into a cozy nest for tourists? Airbnb can be a great way to earn some extra cash but navigating the regulations can feel like riding the Tube rush hour.

With the right Airbnb management software, you can streamline this process making it easier to keep track of your bookings, comply with local regulations and optimize your rental income.

City of London vs Greater London

London is a bit like a puzzle. We've got the City of London, affectionately known as 'the Square Mile', tucked inside Greater London, the big cheese, overseeing 32 boroughs and our City buddy.

Both have their own rules and regulations, so it's essential to know which hat you're wearing when you're hosting.

Understanding the 90-Day Airbnb Rule

Introduced in January 2017, the 90-Day Airbnb Rule places a limit on "entire home" listings in the Greater London area. Meaning, you can only rent out your property for a maximum of 90 days per year.

Once you hit the limit, Airbnb automatically blocks bookings for your property until the end of the year regardless of whether the days were consecutive or spread out.

Additionally, this rule underscores the balance between homeowner benefits and regulatory compliance, a balance that Airbnb management software can help maintain by tracking your rental days and alerting you as you approach the limit.

Why the 90-day rule?

The 90-Day Airbnb Rule was put in place to regulate short-term lets and holiday rentals in London.

It was a response to the increasing popularity of platforms like Airbnb and aimed to strike a balance between allowing homeowners to benefit from short-term lets while ensuring they comply with regulations.

Short-term Holiday Let Rules in London

Planning Permission

• Short-term holiday lets often require planning permission considering a change of use from residential to commercial. Hosts must obtain this permit before operating except when renting out a part of their home while residing on the property.
• Hosts renting out entire homes must obtain planning permission unless they rent for 90 days or less annually categorized as temporary sleeping accommodation.
• Non-compliance may lead to substantial fines making it crucial for hosts to secure necessary permissions well in advance.

Other short-term rental considerations

• Landlord consent: If you're a long-term renter, get your landlord's approval before hosting.
• Leasehold permissions: Leaseholders require permission from the freeholder.
• Mortgage adjustments: Residential mortgages may need to be switched to buy-to-let mortgages.
• Insurance updates: Ensure your home insurance covers short-term rentals.

Host responsibilities

• Obtain a gas safety certificate for your property.
• Conduct annual fire risk assessments.
• Install smoke and carbon monoxide alarms.
• Inform guests about important information like waste disposal, recycling, noise levels, and neighborhood expectations.
• Consider maintaining a visitor log for documentation purposes.

Airbnb and Short-term Let Tax in London

Just like any other income, earnings from your Airbnb hosting are subject to taxes. But the good news is the type of property you rent and how you rent it determine how you're taxed.

Not to mention, short-term rental software can simplify financial management, offering tools for tracking income, expenses and tax liabilities ensuring you maximize your allowances and deductions.

Rent a Room scheme

• Renting furnished rooms within the main residence qualifies for the Rent a Room scheme offering a tax-free allowance of £7,500 on gross receipts.
• Individuals earning less than £7,500 annually are exempt from declaring income.
• If multiple individuals earn income from the same property, the allowance is halved.

Furnished Holiday Letting

• Separate properties rented as short-term holiday lets may qualify for furnished holiday letting status, offering tax advantages and capital gains relief.
• Eligibility criteria include UK location, sufficient furnishings and minimum letting requirements.

Section 24

• Properties not qualifying as furnished holiday lets are subject to Section 24 interest relief restrictions affecting mortgage interest relief for higher-rate taxpayers.

VAT

• Income exceeding £85,000 mandates VAT registration and charging guests at a rate of 20%.
• Exceptions apply such as stays exceeding 28 days.

Council Tax

• Properties rented for fewer than 140 days per year are subject to council tax instead of business rates.

Final Thoughts

So, there you have it! Hosting on Airbnb in London can be a lucrative venture, but it's not without its challenges.

Keep an eye out for any new rules or regulations on the horizon. The government's always tinkering with things and you don't want to get caught out.

Remember with a bit of planning and integrating an all-in-one Airbnb management software like Hostaway into your strategy not only simplifies operations but also positions your property for success in the competitive London market. You'll be hosting like a pro in no time.

FAQs

1. Is it possible to bypass the 90-day limit on Airbnb in London?

No, bypassing the 90-day limit is not possible. However, hosts can explore alternative letting types and platforms to maximize earnings while complying with regulations.

2. Do I need to register my property with any authorities before listing it on Airbnb?

Some boroughs in London require hosts to register their properties for short-term letting or obtain specific permits or licenses. Make sure to check the requirements in your area to ensure compliance with local regulations.

3. Does Airbnb’s 90-day rule apply outside London?

The 90-day rule imposed by Airbnb currently applies only within Greater London. It restricts property owners from renting out their entire home for more than 90 days in a year without planning permission.

Discussions about extending similar regulations to other UK cities have taken place. Non-compliance in London can lead to fines of up to £20,000 emphasizing the importance of adhering to local rental regulations.

4. How can I ensure that I comply with London’s short-term rental regulations?

To comply with London's short-term rental regulations, you can rent your property on Airbnb for up to 90 days.

Once this limit is reached, transition it to a medium or long-term rental or indicate on Airbnb that it's available for "90+ days" to remain compliant.