If you're tempted by the lucrative business of Airbnb, there are certain things to bear in mind.
Will your property be insured? What rules and regulations must you comply with? Is there a minimum time you can put your property up for rent? How does payment work? And - what about taxes?
We answer your top 10 Airbnb FAQs in our latest blog post.
1. How do I put my property on Airbnb?
It’s completely free to put your property on Airbnb, simply head to the website and create a listing. You’ll have to fill out a description, upload some photographs and select your nightly price. Once you’ve done that, the next step is to set availability and your house rules - then wait for the bookings to start rolling in!
2. Will my property be insured on Airbnb?
Yes. Airbnb provides a Host Guarantee up to £600,000 at no extra cost, which is backed by Lloyd’s of London.
The cover protects your home against any damages, but it doesn’t allow you to claim for cash, jewellery, collectables or personal liability - so Airbnb recommend you obtain additional home insurance if you are going to be leaving your belongings in the property.
It’s also worth noting that many home insurance policies won’t cover for paying guests, so make sure you read the small print and check you’re covered. While it’s very unlikely that something will go wrong, it’s certainly sensible to take preventative measures, just in case. Make sure you are suitably insured, you efficiently screen potential guests and set up a security deposit in your listing.
3. Does my property need to comply with any rules or regulations before I put it on Airbnb?
It certainly does! Since the beginning of 2017, entire home listings in Greater London are limited to 90 nights per calendar year, unless hosts have permission from their local council to rent it out for longer. Airbnb will cap your listing after 90 days, but it’s worth keeping an eye on your calendar and knowing how long you have left so you can plan accordingly.
Of course there is nothing to stop you renting out a room or two out of three rooms of your primary residence. The rents you can achieve during weekend stays or overnight stays can easily match or beat what you could achieve for a monthly rental income from a normal tenancy - plus you can enjoy greater flexibility regarding when you want to rent out your home.
Though Airbnb is a short-term solution, that doesn’t rule it out for landlords who favours long-term tenancies. Tenant demand surges by up to 64% in June - September, as recent graduates head straight to London to find their first job. It’s a clever idea therefore to synchronise your tenancy dates to take advantage of higher prices and shorter voids in summer. One way of doing so - and potentially maximising your income - is to put your property on Airbnb during the colder months, before switching to a long-let or as AST tenancy when demand is highest in the summer.
It’s also important that your property complies with local health and safety regulations - as if it doesn’t, you’ll almost certainly invalidate any insurance you have. We therefore recommend you get an expert in to carry out gas and electrical safety tests, as well as carrying out a fire risk assessment.
It’s also helpful to provide book of emergency contact numbers, a first-aid kit, and make sure you minimise any potential hazards.
4. How do taxes work for hosts?
In terms of paying taxes, the same rules apply as to any other business. In other words, money you earn from hosting is income and therefore subject to tax.
If you’re renting out your primary or only residence, you can benefit from the rent-a-room allowance, which allows you to earn up to £7,500 per year without having to declare it or pay tax on it. You must complete a tax return if you earn more than the threshold, and income tax will have to be paid.
On the other hand, if you're a landlord and Airbnbing a property that isn’t your primary or only residence, the same rules apply as if you were letting out your property long-term. You can read about the rules here.
If you don’t have an accountant or an agent managing your property, make sure to keep accurate accounts of income for tax purposes in case you need to declare the earnings from your property when filing your annual return.
5. Are guests verified before booking?
For most people, the most daunting aspect of Airbnb will be the prospect of welcoming strangers into your home. But thankfully there are lots of options available to Hosts to effectively screen and verify potential guests, plus communicate with them too. For this reason, 99% of Hosts will never have a problem with guests.
Firstly, Hosts can require potential guests to complete Airbnb’s Verified ID process. This allows Hosts to find out exactly who the guest is, plus have a record of their identification online.
Hosts also have the ability to find out more about potential guests through communicating with them. If you’re using ‘Instant Book’ you can also select that only recommended guests can use the feature.
Keep in mind that fair housing laws and discrimination rules apply.
6. Do you charge for cleaning?
If you are going to be renting out your property on Airbnb, it’s imperative it’s kept clean and tidy at all times, and that there’s fresh laundry, towels and necessities for each new guest.
Many hosts therefore decide to charge a cleaning fee to help account for these added expenses.
7. How much can I make from renting my property on Airbnb?
The amount you can earn varies according to your property and location, but, as a general rule you’re expected to earn between 25% and 50% more than you would on a long-term let. (Hence why there are now over 48,000 Hosts in London!)
You can click on our Instant Valuation tool to find out exactly how much your home could fetch on Airbnb.
Many people decide to rent out their property while they're on holiday to effectively pay for their trip; some will put their vacant property on Airbnb to earn money until they sell, while others will put their home on the site when a big local event it on, such as Wimbledon, and stay with friends or family. Of course the amount you can earn will dramatically increase in line with big local events.
8. How will I receive payment?
Airbnb releases your payment around 24 hours after your guest’s scheduled check-in time. The time it takes for the funds to arrive in your account depends on your payment method, which you can learn more about here. If your guest is staying for 28 or more nights, payments for the specific reservation are released monthly.
Though it’s completely free to list your property on Airbnb, the company makes its money by charging fees to both guests and hosts on each rental. Hosts are charged a small flat fee of 3% + VAT on each booking - and this is deduced from your net total minus any security deposit you may have received.
9. What do I need to do to get my property Travel Business Ready?
If your property is business ready, it has the added benefit of being more visible to guests and potentially more appealing too.
To be ‘business ready’, your listing must be an entire property that is smoke-free and pet-free. It also has to include the following amenities:
- Wireless Internet
- A laptop-friendly workspace
- Self check-in (this includes a key lockbox, doorman, keypad, or smartlock)
- A smoke detector
- A carbon monoxide detector
- Essentials (toilet paper, clean towels, and fresh linens)
- An iron
- A hair dryer
Airbnb states that ‘business ready’ listings must also have at least 3 star rated reviews before they can be eligible for Business Travel Ready status. For listings with 3 or more star rated reviews, at least 60% of both the listing’s primary reviews, and the listing’s reviews for cleanliness and accuracy must be 5 star reviews.
Hosts of Business Travel Ready listings also must have responded to 90% of booking requests within 24 hours over the last year.
Furthermore, Hosts of Business Travel Ready listings must provide a 7-day cancellation commitment to reservations. If a listing has a cancellation within 7 days of a confirmed check-in date, it can't be considered for Business Travel Ready for 1 year from the cancellation date.
10. Can I use Airbnb if I only rent – not own– a property?
Technically Airbnb invites anyone and everyone to list all types of properties, and this does apply to tenants or renters. But of course the ultimate decision as to whether or not you can rent out the property on Airbnb while you’re away lies with the property owner - and most will not like the idea of you profiting from their property.
Putting your property on Airbnb without notifying your landlord is likely to be breaching your tenancy and could lead to eviction. We therefore strongly advise you read through your tenancy agreement and check with your landlord before listing the property on Airbnb. It may not be worth the risk.
If you'd like any more information on Airbnb, or if you'd like to learn more about our Airbnb Management service, Portico Host, give us a ring on 0207 099 4000, or visit www.portico.com/airbnb. Click here for an instant Airbnb valuation.