Thinking of letting your home on Airbnb? What legal and financial considerations should you investigate first...

The cost of holidaying abroad can be prohibitive for many individuals and ‘staycations’ - or holidaying within the UK – is still a popular trend with more people attempting to keep travel costs down by staying in private houses. As a result, the short term letting site Airbnb is now a major player in the hospitality industry in the UK providing a seemingly simple way to make money from your home.

Airbnb, which launched in 2008, allows homeowners to list their spare rooms or properties on the website whilst holiday makers get unique and often cheaper accommodation in areas away from the usual hotels hotspots.

Large numbers of people find that Airbnb can be a good website to use for either saving money while they travel or earning some extra money from their spare rooms but, how easy is it to make money from listing your home on Airbnb and how safe and legal is it?

 

How to list your home

Airbnb acts as an intermediary between those who want to rent out space and those who are looking for space to rent. The Airbnb website has been designed to make listing your home a straightforward process. First, you need to use an email address and password to create an account. The site requires you to agree to treat everyone equally, regardless of race, religion, sex, or other factors and once you agree, your account is active. The website will then allow you to tailor your listing to suit your property and your availability.

There are two options available to you; do you want to stay in your home and rent out a single room (like a traditional B&B) or would you prefer to move out of your home and let out the whole property? It’s worth mentioning here that unlike a traditional B&B, if you rent your spare room via Airbnb, you’ll usually allow guests to have access to your kitchen to cook or prepare their own meals. This also means guests will need some fridge space to store their food. If this doesn’t appeal to you, you can tailor your listing to make it clear that you are not allowing access to certain rooms.

You can set how much deposit you’d like to charge and then Airbnb takes care of all the payments on your behalf. The site will hold the money until 24-hours after the guest’s arrival after which, it will take 3% of each reservation.

 

Legal and financial considerations

With anything, there is an element of risk and there have been well documented tales of theft and destruction of Airbnb properties (although it needs to be noted that these form a very small percentage of lettings given the huge number of people who let their rooms and homes out via Airbnb each day).

However, a few legal and financial considerations should be taken into account before you take the step of renting out your home. For example, if you are not the home owner, your tenancy agreement may have a restriction in it stipulating that your rented property cannot be used for any purpose other than as a private residence. If this is the case and your landlord finds out that you are letting your property out, you will be in breach of your tenancy agreement and the landlord can legitimately terminate the lease.

However, this may not apply to tenants who want to let out a single room while they remain in occupation; it would be advisable to check with your landlord or solicitor first.

If you are a homeowner, you should check the fine print of your mortgage contract because if your mortgage restricts or prohibits short term lets (without your lender’s prior consent), your lender could legally demand the repayment of their loan due to you breaching the terms of the contract.

Another consideration to investigate before committing to renting your property is the terms of your household insurance as you risk invalidating your insurance (both buildings and contents) if you have not told your insurer that you are letting your property on a short-term basis.

Renting via Airbnb provides a fantastic source of income but before you choose to rent out a room it would be advisable to speak to an accountant or financial advisor as you may need to declare the income to HM Revenue and Customs.

Biggest Tip for Hosts – be professional and accommodating to your guests; they are paying money to stay in your home however always check references and read reviews about your guest’s behaviour during stays with other Airbnb hosts to get a flavour for how they will act when staying in your home and remember, you don’t have to accept a booking just because you have a vacancy.  

 

Further Reading:

Wanderlust Marriage (blog, reviewing pros and cons of using Airbnb)

Royds Withy King solicitors (for expert legal advice on the complexities of letting your home via Airbnb)

Airbnb Hell (This website posts stories from hosts and guests alike; make sure you do your research before committing)

Digital Trends (detailing more pros and cons of renting your home or individual room out)

This article was written by Fiona Gilbert: Editor
Wise Old Elephant

Hello! I’m Fiona and I work behind the scenes with a fantastic team of independent health, care, legal & financial experts to bring interesting & informative content to the Wise Old Elephant site. Contact: enquiries@wiseoldelephant.co.uk