Everything you Need to Know about Airbnb in Swansea

The globally recognized online platform, Airbnb, continuously rises in popularity in the UK, and property owners are looking to diversify their short-term let portfolios. So, why not invest in an Airbnb in Swansea?

But before taking a step forward to starting an Airbnb business, it is important to first understand the local laws, regulations, and taxes in operating a holiday home in Swansea to avoid any challenges and legal issues that may be faced.

That being said, let’s dive into:

• Getting to know Swansea
• Why invest in Swansea?
• What is a Holiday Let in Swansea?
• Furnished Holiday Let Rules and Regulations
• Furnished Holiday Let Taxes

Getting to know Swansea

On the south coast of Wales lies the second largest city and county, Swansea, the birthplace of poet Dylan Thomas. If you do not know, Dylan is a Welsh poet and writer, known for his works including the poems "Do not go gentle into that good night" and "And death shall have no dominion".

As a matter of fact, Swansea is one of the hotspots in Wales drawing travelers to this city, thanks to its legendary nightlife and culture. But apart from that, the city would never be complete without its largest and most historic market with over 100 stalls selling everything from local fresh produce delicacies such as laverbread and cockles to leather goods and more.

Moreover, you'll find yourself exploring the city's attractions from Swansea Museum, Glynn Vivian Art Gallery, Clyne Gardens, Gower Peninsula, and Three Cliff Bay to name a few. Believe it or not, just a short distance from the center of the town, you'll stumble on hidden gems just waiting to be seen.

But more importantly, based on the Swansea Bay Survey 2019, the city welcomed 4.79 million visitors and 68% rated their visit as very enjoyable.

Why Invest in Swansea?

Unfortunately, Swansea has been overlooked by many property investors. Little did they know, Swansea has some of the cheapest properties of any UK city, a fast-growing student community, and all the city amenities you would expect as well as the excellent natural beauty it offers.

Swansea is one of the few cities to have a five-mile beach as well as access to Welsh mountains and countryside appealing to tourists and property investors looking to invest in Airbnb or holiday lettings. According to HM Land Registry, the average house price in Swansea in 2019 is £163,902.

Just to the west of Swansea, the Gower Area is considered the most expensive area with prices well above the Swansea average. However, the return of income would probably be more with rental yields around 3% across the SA3, and property prices are still much lower in comparison to other parts of the UK. Apart from that, Gower is a tourist hotspot offering incredible views on walks across huge limestone cliffs, various species of orchids, and diverse wildlife. In fact, in 1956, Gower won first place in Britain for the Area of Outstanding Natural Beauty title.

Moreover, Swansea is known to be a university city making it a great opportunity for property investors to tap into the student housing let market. According to reports, by 2025, the student numbers will increase with at least 4,000 more students in Swansea future-proofing the city's economy. If you choose to invest in buy-to-let properties, Byrnmill, Uplands, Sketty, and Mount Pleasant are popular areas in Swansea to consider.

What is a Holiday Let in Swansea?

Generally, any letting of a house or flat or residential available to travelers/holidaymakers for any short period of time between one night to a month, provided with fully furnished amenities is considered a holiday let. Whereas, a short-term let is available for any period not exceeding six months.

Although, keep in mind, for a property to qualify as a Furnished Holiday Let (FHL) and eligible for special tax rules, it :

• must be furnished to a standard
• must be available to let for at least 210 days per year, excluding any days you've stayed
• must be based in the UK or the European Economic Area (EEA)
• must let the property commercially to the public for at least 105 days in the year
• must not be occupied by any long-term tenants for more than 155 days of the year and by the same tenants for 31 days of the tax year

Furnished Holiday Let Rules and Regulations in Swansea

To help raise the standards across the tourism industry and to tackle the issue of second homes affecting communities, the local council introduces a statutory licensing scheme for anyone who plans to operate a holiday let in Swansea, making it a requirement to obtain a licence.

Moreover, before hosts can operate holiday lets, the council is also considering proposals such as a registration 'kitemark' scheme with spot checks for compliance on gas safety and a self-certification scheme for hosts.

For more details, visit the government website.

Building Regulations

The local planning authorities introduced new changes into the planning system that will be able to make amendments, and require planning permission for the change of use from a primary home, second home, and holiday let accommodation in order to control the number of second homes and holiday lets in the community.

Health and Safety

• Carry out a risk assessment for the entire property to minimize any risks and hazards
• Leave a list of emergency contact numbers for guests in case of an emergency
• Ensure your holiday let is child-proof safety
• Ensure having secure handrails on staircases
• Identify hazards such as low ceilings by providing caution
• Ensure to regularly check and stock first aid kits. Let guests know where first aid kits are located.
• Provide instructions for guests on how to safely use appliances and facilities

Fire Safety

• A fire risk assessment must be carried out to identify any potential hazards
• Install a smoke alarm and should be regularly tested to ensure they are in good working condition
• Ensure that all upholstered furniture complies with updated requirements for fire resistance
• Identify fire hazards in and around the property

For more details, visit Britain's Fire Risk Assessment.

Gas Safety

• Ensure all appliances, fittings, chimneys, and flues are well maintained and in a safe condition
• Annual gas safety check on each gas appliance must be carried out by a Gas Safe Registered Engineer
• Keep written record of inspection for at least two years
• Install a carbon monoxide detector

Electrical Safety

• Ensure all electrical equipment supplied are safe to use
• Perform regular visual checks of electrical items to ensure that they aren’t deteriorating due to wear and tear
• Carry out Portable Appliance Testing (PAT) by a qualified electrician at least every 5 years
• Ensure guests by leaving instructions/handbooks for your electrical items to reduce the risk of faulty appliances

Swimming Pool and Hot Tub Rules

• Undertake a risk assessment of your swimming pool
• Comply with the HSE swimming pool health and safety guidelines
• Adhere to HSE’s hot tub operation and management guide
• Consider putting safety signs up or highlighting any slips or trip hazards
• Provide guests with house let rules on pool and hot tub safety

TV, DVD, and Music Licenses

• One or more televisions provided require a TV licence costing £159 for up to 15 bedrooms on a single site. Therefore, holiday lets located in separate locations will need a licence for each
• Providing a DVD film library to guests will require a licence from two organisations- Film Bank Media and MPLC without violating copyright laws. However, if guests bring their own DVDs, it is not necessary for a licence.
• Utilising music in a public environment requires the use of a Public Performance Licence (PPL)

Accessibility

According to the Equality Act 2010, you must ensure disabled guests are treated equally the same as any other guests and would make reasonable adjustments to the holiday let suited to their needs.

For more details, visit Britain's Accessibility Guide.

Insurance

• It is not a legal requirement to have vacation rental insurance. Although, keep in mind that it is still essential to consider having one in case of property damages, liability, and loss of income.
• Hiring employees requires you to have an Employer's liability insurance
• The right type of mortgage out for your holiday let will require Building Insurance by your lender

Furnished Holiday Let Taxes

Council Tax or Business Rates

Generally, if you are a host operating a holiday let or partially reside and is available to let for 140 days or more per year, it would be more likely to be classified as self-catering accommodation and will require you to pay business rates. However, if the holiday let is available for less than 140 days, then most likely you will be liable to pay council tax.

Although, keep in mind that the Welsh government previously confirmed tax hikes on holiday lets that do not let their properties for more than half a year. Apart from that, second homes and long-term empty properties will increase council tax by 300%, effective from next year, April 2023.

Moreover, the local authorities address a change from April 2023 that the criteria for self-catering accommodation being liable for business rates instead of council tax. This means properties that are available to let for a minimum of 140 days, and let for at least 70 days will be required to pay business rates rather than council tax. In addition, thresholds to being available to let for at least 252 days and actually let for at least 182 days in any 12-month period will increase.

VAT

If your total Airbnb rental income is exceeding the threshold of £85,000 per year, you'll be required to register for VAT and pay the standard rate of 20%. However, you can opt to either pay it yourself or split the extra cost between the guest and you by slightly increasing the nightly rates of the holiday let.

Note: Your FHL property income may also be subjected to VAT even if you run a separate business and are a VAT-registered individual.

Land Transaction Tax

The Welsh government has announced, followed by a consultation about varying land transaction tax locally in areas with a big number of second homes, working with local authorities to develop a national framework to increase land transaction tax rates for second homes and holiday lets to be applied in their local area.