It seems controversial holiday lettings site Airbnb is never far from the headlines these days.
With the UK in the midst of a housing crisis many – the RLA included – have spoken out against the site, claiming the exponential rise in the number of homes now being offered to let is having a detrimental impact on the supply of desperately needed rental properties.
And while this is undoubtedly the case – particularly in London – can we really blame landlords for taking the leap?
The recent stamp duty surcharge on new buy-to-let purchases along with the changes to mortgage interest relief and the wear and tear allowance all combine to make the PRS a much less attractive place for property owners who want to rent out homes.
Battered by the taxman and hampered by ever increasing legislation, it is a very real temptation, especially when faced with increased profits and fewer regulations, to abandon buy-to-let in favour of lucrative holiday lets.
And provided this is done properly this is a legitimate business decision.
Anecdotally a number of landlords have gone on record as saying their fortunes have improved considerably by making the change – with a former landlord in Leeds claiming he tripled his income.
So what are the pitfalls?
Firstly, anyone tempted to make the move must be aware that changing the use of their properties could see them in breach of their mortgage conditions and potentially invalidate their insurance.
If you have a mortgage on your property it is extremely likely that letting it out on Airbnb will breach your mortgage conditions. Similarly, there is the issue of insurance. Any insurance policies on the property may be invalidated by moving from buy-to-let to holiday lettings and making the change without checking this out isn’t advised.
Letting a leasehold property out on Airbnb could also be against the law. In a recent landmark case a UK court ruled that a leasehold flat owner had breached the conditions of her property’s leasehold contract by advertising and renting out the apartment on Airbnb. The contract included a clause saying the property was to be used ‘solely as a private residence’.
So while renting out property Airbnb may seem like an easy way to make big bucks while side stepping red tape – all while thumbing your nose at the taxman – it is not a decision to take lightly.
In short before you make any big decision on the future direction for your property portfolio, be that a single flat or a string of homes, read the small print. It could save you a lot of money and a lot of heartache long term.
To read the RLAs most recent research work into the Airbnb phenomenon click here.