Can I Put My Home on Airbnb?
Estimated reading time 9 minutes
Holidays, parties, and other social events have all been helping those on Airbnb make great money over the past few years. It’s fair to say that many other homeowners are considering following suit. Luckily, in many cases, you will be able to put your home on Airbnb and start to become part of the community that has grown at a rapid pace since its inception in 2008.
Whilst is it certainly something many homeowners can do, putting your home on Airbnb isn’t always as straightforward as you may have thought.
Certain rules and regulations can put pay to all of us soon becoming mini hotel tycoons and it is important that you follow them to avoid any potential penalties. In the latest of our blogs, we dive deep into what you need to do to get your home on Airbnb and whether you are eligible to do so.
Can I let out my home on Airbnb?
Many people are taking advantage of the extra income Airbnb may bring them, but it must be done properly to avoid any issues. If you own the property, you can let out the whole place for people to enjoy for a holiday or an event, but you will need to check the terms of your mortgage agreement first.
Many lenders do not allow the renting out of a home (or even just a room) for purposes such as Airbnb, whilst others assess each request on a case-by-case basis. Should it be agreed that you can let out your home, you may need to pay a fee to the lender or even change mortgage rates. Other mortgages allow your property to be let out for a few weeks a year and this again, does come with a fee.
Where a mortgage does allow you to let out your property, you should check what the maximum letting periods are. In some cases, if your property is available for more than a few weeks, you will need to switch to a new mortgage. If the mortgage agreement says that you are not eligible to use the property for Airbnb purposes, you should ensure you follow the rules. If you were to break them, you could find yourself charged a penalty fee, moved on to a worse rate, or in extreme cases, have the property taken from you.
You should also check with the freeholder too. Leases have a variety of conditions within them and quite often, where you are the leaseholder, you are not allowed to rent out your property. Finally, if the property is a housing association or council property, you will not be allowed to put it on Airbnb, this would be seen as subletting which would breach the terms of your agreement.
Can I let out a room in my house on Airbnb?
Whilst some of us own more than one property, the majority of us have one house we can call home. With Airbnb, you can rent out a room, subject to your mortgage lender allowing it and, in most cases, without any rate change or penalty. It is still advisable to check though as if you were to be in breach of your agreement you will likely face penalties.
You won’t be able to let the room out on Airbnb if you are renting the property yourself and it is preferred that your property is in an area that draws in visitors.
You should also consider that if letting out a room, you are, in effect, using your home as a small hotel. This means maintaining standards is of huge importance. Poor levels of hygiene, a dirty property, and a lack of general customer service will all lead to poor reviews that stop people from wanting to book.
Does home insurance cover using your house on Airbnb?
You need to remember that this is your home and the items in it are yours. So, what happens if they are stolen or broken when you are letting your property or room out?
Most insurers won’t cover your property for rental purposes as they see the risk potential of items being damaged or stolen as much higher when you are letting strangers into your home.
Before putting your property on Airbnb, check if your current provider will cover you for Airbnb rentals. They may offer a new plan or simply add an extra cost to your existing one. It will depend on whether you plan to let out the whole property or just a room. Unfortunately, whatever the policy, there is every chance that theft or accidental damage caused by guests will not be covered.
Should a policy not be obtainable from your standard provider, you can speak to a specialist insurer who deals with policies specifically curated to cover properties being used for temporary rentals.
You may also be swayed by the Airbnb guarantee, it offers cover for damage caused by guests but is not an insurance policy and is very limited in its scope. For example, many of the most common items that are likely to be damaged or stolen are not covered at all.
How much money can I earn on Airbnb?
Much depends on what you are letting out. A property in a coveted area will draw much more interest than somewhere quite run down and as a result charge more for its use. A house can deliver much more of a return than a room, but will you fill the entire property enough?
In theory, the earnings potential is endless. Market it well, build up a good reputation and be in a location that has much to offer the clientele you target and you could find it a huge success.Just remember, earnings are taxable, and in Airbnb rentals, there are a few things to be aware of.
Whether you are letting a room, or a whole home (if it’s your main property) you can earn up to £7,500 tax-free with a government scheme known as the Rent a Room Scheme.
It applies when guests stay, short-term, in a furnished room or rent the whole property.
After that, any earnings must be declared, and the tax paid on them. So, whilst the earnings are potentially unlimited, you need to be aware of the tax implications. There are two options to consider though:
- The Rent a Room Scheme allows you to earn £7,500 before having to pay tax. If the earnings fall below this amount, you do not need to do anything. If you have generated revenue above this amount, you must declare the earnings and then opt into the scheme. You will then pay tax on anything above that amount.
- Deducting expenses means you will declare all income and expenditure and then have an amount left over as your final figure that tax can be declared on. Depending on the final figure, this can sometimes prove to be more lucrative. What expenses can be deducted are varied so check the govt website to see the current list. It commonly includes things such as council tax, utility bills (guest share only), service charges and more.
Should you be unsure of the best option for you, consider speaking to a financial advisor.
How much should I charge for my home on Airbnb?
You want to receive a decent income from letting out your room or home, but you should be mindful of local competition. Price it too high and nobody will visit or will at least have expectations in line with hotels or other highly rated properties in the area. You then need to deliver on that vision the guest has. Price it too low and you could be missing out on a strong revenue stream.
If the area you are in is mainly seasonal, you should make your pricing reflect this. That way you match the demand for the area and remain competitive.
What restrictions are there on me using my home as an Airbnb?
Aside from checking that your mortgage and home insurance allows it; you are more or less free to let out a room or your home. There are of course health and safety regulations to adhere to and we will cover those in the next section.
Should your property be in London, you will only be allowed to rent it out for a total of 90 nights per year. If this is your main residence, this may not be much of a problem, but if this is a property that you want to let out for longer you will need to seek planning permission to alter the use of the property.
What are the safety requirements for using my home as an Airbnb?
Your property is, in effect, being used as a hotel so you must provide your guests with the safety features that any standard hotel may provide. You will need a clearly marked fire escape route, provide suitable extinguishers, and have a fire risk assessment completed.
In addition, a valid EPC for the building will be required and a working hot water system.
With all the above in place, if you are in a desirable area, operate as a positive host, advertise well and remain fully safety compliant, you should see success as an Airbnb host. If you are looking to expand your property portfolio and need to sell in order to purchase something more desirable, speak to us! We buy any home so that you can complete your property plans quickly and easily. As cash house buyers, we can make you an offer, and subject to your acceptance, have funds with you in as little as seven days. Contact us today to find out how it works and how quickly you can get a free cash offer on your property