Why should one invest in a short or medium-let airbnb property in London?
Investing in a property that could be rented out as a mixture of short and medium-term rentals is a great way of generating more revenue as opposed to a traditional long-term let model. London properties in central locations reach occupancy of up to 90% annually. Short and medium-term rental model also gives an opportunity to reduce wear and tear, inspect the property more often and address any maintenance regularly, as opposed to when long-term tenants move out.
What is considered a short-term let?
A short let is any residential tenancy of less than six months where utilities, TV and wifi are included in the rent. The properties are usually fully furnished and include bed linen and a kitchen with appliances, cooking utensils, crockery, cutlery and glassware.
What kind of returns can be expected?
Apartments and town-houses located in central London, ideally zones 1 to 2, should be generating up to 30% more revenue versus long-term rentals, after all the costs have been taken into account.
Which areas in London have the highest demand for short-term lettings?
General rule is that central London zones 1 and 2 have the highest demand for this type of lettings. Areas such as Covent Garden, Bayswater, Paddington, Soho, Chelsea, Holland Park, South Kensington, Fulham, Primrose Hill, Camden, Notting Hill, Clapham, Knightsbridge, Belgravia, Pimlico, Fitzrovia, Bloomsbury, Southwark, Westminster have the highest demand.
What to consider when buying a property for short-term rentals?
If the apartment is a leasehold property - one should consider whether the lease allows for this type of activity and if it specifies, what is considered a short-term let. In this situation share of freehold properties are a better choice, as this could be agreed easier with other freeholders.
Is it legal to airbnb your property in London? What is the 90 day rule?
Yes, it is. Before the 90 day rule, short-term rental hosts in London had to register for planning permission to change the use of their properties. In 2017, they introduced a new law that allowed anyone to rent out their entire home on a short-term rental basis without planning permission for a maximum combined total of 90 nights per calendar year.
What is a 90-day rule?
Before 2017 anyone letting their property on a short-term basis had to get planning permission from their local council. When the 90-day rule was introduced, private landlords do not need to get planning permission and are allowed rent their property on a short-term basis up 90 days each year.
What about bookings of 90 days or more?
If you get a single booking that is over 90 days, then this doesn’t count as a short-term rental - it instead counts as a mid-term rental, and isn’t included in these regulations.
What about taxes?
Income from airbnb rentals or medium-term rentals is subject to the same income taxation as any other income and has to be declared each year. We recommend to seek advice from an accountant what implications this has on your tax return and overall taxation bracket - as this depends on your overall annual income.
How much commission does airbnb take?
At the end of 2020, airbnb announced that they are removing the split commission structure and all hosts that are using property management software to manage their listings will start being charged the full 15% commission from 1/1/2021, where as the guests will not be charged anything. This is a very similar commission charging policy that is used by booking.com with all hotels and apartments across London and Europe.
What percentage does airbnb take and how much does airbnb charge hosts?
Previously airbnb were offering a split between the guest (12%) and host (3%) in most of Europe. However, this pricing is being phased out and from 1/1/2021 hosts will start paying the full 15% fee. It’s a good idea for hosts to update their pricing to make sure they are not out of pocket after the changes take effect.
Should I hire a property management company to help me manage my airbnb property?
Looking after an airbnb property is a time-consuming activity, that’s why many hosts choose to employ a professional airbnb management company in London, to take care of listing the property, guest communication, guest vetting, housekeeping and to address any maintenance issues that can arise during their stay. Get in touch with StayinLondon.co.uk to get your personalised quote or for any advice you might need setting up your own listing free of charge!
