Scouting locations in the UK for setting up an Airbnb? Or looking to use your home in Plymouth as a self catering rental accommodation? As an Airbnb host it is important that you have good knowledge and understanding of the laws and regulations that govern your short term holiday let as well as the taxes you are liable for in the city, region, and country your property is located in. You also need to be aware of the tourist market potential in your area so you can cater and market to visitors appropriately and property costs.
One of the greenest cities in the UK with 40% of the space being green, Plymouth is one of the best cities in the UK for Airbnb investment, attracting 5.4 million visitors in 2018 accounting for a spend of £330 million. As the largest city in Devon, it is also a great place from which to explore the county.
In keeping with its vision to become one of Europe’s finest, most vibrant waterfront cities, Plymouth hosts a year-round programme of events and activities. These include Pirate Weekend Plymouth, Flavour Fest, Armed Forces Day, Plymouth Seafood Festival, and the British Fireworks Championships. The major naval town with a long and storied history also hosts world-class sailing events such as SailGP, Rolex Fastnet, and Transat. In 2019, 350,000 people attended events held in Plymouth with over 100,000 visiting the British Firework Championships.
The city also lays claim to significant cultural capital, being home to the largest regional theatre in the UK and one of the largest cultural heritage spaces in the UK, The Box – a museum, gallery, and archive. Opened in 2020, it is expected to attract over 300,000 visitors through its doors. Over 750 listed buildings can be found in Plymouth such as The Grade II listed Elizabethan House as well as the largest concentration of cobbled streets in England. Together with its 5 Gold Anchor winning marinas and the Mount Batten Watersports and Activities Centre, Plymouth also offers outdoorsy activities on land and sea !for sports tourists.
With investment having been made to develop the cruise market and a long-term aspiration to become a key cruise port in the southwest, the city is also likely to see a growing influx of cruise liner tourists in the coming years.
According to AlltheRooms, in Plymouth, the average daily rate is £133 (July 2022).
According to AirDNA, in July 2022:
Rental demand in Plymouth is 70.
Of the 732 active rentals, 77% host exclusively on Airbnb while 16% host on both.
1- and 2-bedroom properties are the most popular, hosting an average of 4.4 guests.
Flexible (39%) and Strict (32%) are the most popular cancellation policies.
1 (40%) and 2 (33%) night stays are the most popular.
Meanwhile, according to the UK House Price Index, the average price of a house in Plymouth is £188,957 (April 2021), up 5.4% from the year before.
According to Home.co.uk, average rents in Plymouth are:
£688 pcm for a 1-bedroom property
£734 pcm for a 2-bedroom property
£808 pcm for a 3-bedroom property
£658 pcm for a 4-bedroom property
£541 pcm for a 5-bedroom property
Airbnb holiday lets in Plymouth are governed by a number of laws and regulations imposed at the national and city level.
To operate a short term holiday let, you need to make sure you have the necessary permissions:
If you have a mortgage on the property you are hoping to short let, make sure your mortgage lender permits it. Most residential mortgages and buy-to-let mortgages do not permit short term lettings though they may allow you to switch to a specialist short term let or holiday let mortgage which has a higher interest rate.
If your property is leasehold, make sure your lease permits self catering rentals or speak to the freeholder.
Because using your home as a short term holiday let can sometimes be considered to be a change of use, it is best to check with your local authority to make sure you don’t require planning permission.
The Equality Act 2010 (England, Scotland, and Wales) makes it illegal to discriminate against guests based on gender, race, or disability. As the operator of a short let accommodation, it is your responsibility to ensure “reasonable adjustments” have been made so guests with disabilities are not penalised by their disability. These can range from making sure to provide physical accessibility throughout the property to allowing a person with a disability to bring along their assistance dog even if you have a strict ‘no pets’ policy.
As the operator of a self catering rental, you must ensure national safety standards for electrical safety are met. This includes:
Getting all electrical installations inspected and tested by a qualified and competent person at least every five years.
Obtaining a report from the person conducting the inspection and test and setting the date for the next inspection and test.
Completing any remedial or further investigative work required in the report within 28 days or sooner if specified as such in the report.
It is recommended however that you conduct a visual assessment regularly and have portable appliance testing (PAT) conducted every year. It is also recommended that you renew your electricity certificate every year.
All short let accommodation providers must comply with the Regulatory Reform (Fire Safety) Order 2005 (England & Wales). This includes conducting a fire risk assessment every year and taking all necessary steps as required from the assessment to ensure continued fire safety.
Meanwhile, according to the Furniture and Furnishings (Fire) (Safety) Regulations, which apply to all furniture and furnishings that were not made before 1950, all upholstered furniture and furnishings such as pillows, beds, cushions, mattresses, and headboards must meet fire resistance standards. They must include filling material that is fire resistant, the cover fabric must pass a match resistance test, and both materials must pass a cigarette resistance test.
All furniture that meet these requirements must have a label stating ‘Carelessness Causes Fire’ attached permanently. It must also include information about the item and its manufacture, the supplier, and a label stating compliance with British Standards BS 7177.
As per the Gas Safety (Installation and Use) Regulations 1998, the operator of a short term rental accommodation is responsible for making sure gas appliances, fittings, and flues provided for guests are safe. These include those in common areas that may be used by guests.
A gas safety check must be carried out every year by a Gas Safe registered engineer with records, including of follow-up actions, maintained for at least two years. A valid gas safety certificate must be displayed in the accommodation at all times.
According to the Smoke and Carbon Monoxide Alarm (England) Regulations 2015, a carbon monoxide detector must be installed in all rooms containing a solid fuel burning appliance such as an open fire or a log burning stove. Because gas appliances can also emit carbon dioxide it is recommended that carbon monoxide alarms be also installed in rooms that have gas or oil appliances such as an oven or boiler.
Some short term holiday let properties are located in areas that don’t have access to mains gas and where oil is used instead of gas for boilers and other equipment. While there is no legal requirement for the holiday let operator to obtain an oil safety certificate, it is recommended that they do so. This involves having all your equipment and appliances that run on oil inspected by an OFTEC registered technician each year. You should also follow government guidance on storing oil at your property.
If you provide a TV for guests to watch or stream live TV in your holiday let accommodation, you must get a Hotel and Mobile Units Television Licence. A single licence will cover up to 15 accommodation units on a single site.
If you provide a DVD film library to guests in your short term let, you must obtain a licence so as not to fall afoul of copyright law. Licences can be obtained from Filmbank Media and MPLC.
If you don’t provide DVDs and guests bring their own instead you do not need a licence.
In case you play music in a public area in your holiday let, such as an entertainment or games area, you will have to obtain a Public Performance Licence. Using music in other areas does not require a licence as it is considered a domestic environment.
Airbnb provides AirCover for hosts which includes damage protection from guests or pets to property or belongings and liability against injury to or damage/theft of belongings of guests. However, it is always advisable to obtain additional vacation rental insurance to ensure full protection.
If you employ anyone at your holiday home such as a host or gardener, you are legally required to obtain employer’s liability insurance.
If you have a mortgage it is likely your lender will require you to obtain building insurance.
Your short term holiday let accommodation can fall under different tax classifications and brackets depending on the type of property and length of tenancy.
If you rent a furnished room or part of your only residence, whether you own the home or not, or if you run a bed and breakfast or a guest house, you are eligible for the Rent a Room scheme.
Homes converted into separate flats are not eligible.
This makes you a resident landlord even if you only let part of your residence for short periods of time.
You can claim up to £7,500 in revenue tax-free for the tax year.
If you earn less in the year you don’t even have to declare your income. If you earn more, you can claim the allowance but must file a tax return.
If you share your income with a partner or someone else, the tax-free allowance is halved so as to equally apply to both.
You can only choose not to opt into the scheme and pay income tax on your rental income after business letting expenses such as insurance, maintenance, repairs (not improvements), and utility bills.
You can include part of the cost of your Council Tax in the rent you charge.
Your property may be classed as an House in Multiple Occupation (HMO) if you let rooms to more than 2 people.
If your holiday let accommodation property is sufficiently furnished to ensure normal occupation by guests and located in the UK it could qualify as a furnished holiday letting. The property must be let commercially, that is with the intention to make a profit. It should also meet the following occupancy conditions:
1. Pattern of Occupation Condition
The total of all lettings that exceed 31 continuous days is not more than 155 days during the year.
2. Availability Condition
The holiday let must be available for commercial letting for at least 210 days in the year. This does not include when you stay at the property.
3. Letting Condition
The short term property must be let as furnished holiday accommodation to the public for at least 105 days in the year. This does not include when you let your friends or relatives stay for free or at reduced rates. Continuous lets that last longer than 31 days are also not counted unless the guest was forced to extend their stay due to an accident, illness, or delayed flight.
If you do not fulfil the 105 days requirement you can opt for a period of grace election or averaging election. To obtain a period of grace election you must prove a genuine intention to commercially let and a pattern of occupation and availability. If you have more than one property, you can elect to apply the 105 day minimum to the average rate of occupancy of all your furnished home letting properties. This is called an averaging election.
If you have more than one property, you can use both averaging election and period of grace elections to make sure they continue to qualify as a furnished holiday letting.
Qualifying your self catering vacation rental as a furnished holiday letting confers a number of benefits. These include:
Capital gains tax relief such as business asset rollover relief, relief for gifts of business assets, and relief for loans to traders
Capital allowances for items such as furniture, equipment, and fixtures
Profits counting as earnings for pension purposes
If you operate jointly with your partner in operating the furnished holiday let, you can freely allocate profits earned between the two of you, no matter the percentage of shares in the property you share.
Expenses and Claims
Because a furnished holiday letting counts as a business, expenses can be offset against the income obtained from the letting. However, this comes with certain limitations:
Claims can only be made against expenses incurred from commercial use. Expenses accrued from private use of the house cannot be considered.
Capital expenses don’t count. That is one-off payments made to purchase, construct or improve the property.
Examples of expenses that can be claimed include utility bills, goods purchased for the home such as cleaning supplies, maintenance and cleaning costs, advertising fees, letting agency fees, and interest payments on loans associated with the property.
The profit/loss from your furnished holiday letting must be calculated separately from any other rental business.
Losses from the first year can be carried forward to the next year, avoiding paying any taxes in the first year.
All furnished holiday lettings in the UK are taxed as a single furnished holiday letting business.
The tax year begins on 6 April of one year to 5 April of the next year.
If your furnished holiday letting accommodation makes a total income of over £85,000 per year, it is liable for VAT. That means you must register for VAT and pay standard VAT rates just like other rental property owners.
The VAT rate is 20% of the total fee charged from guests and unless you decide to absorb it will increase your prices drastically.
If the owner however owns multiple holiday lets or has separate businesses and is a VAT registered individual, their furnished holiday letting income may not be subject to VAT.
If your self catering rental accommodation is available for letting less than 140 days per year, it is only subject to Council Tax.
If your self catering rental accommodation is available to let for 140 days or more per year, it is subject to Business Rate tax.
If however the property’s rateable value is less than £15,000, you are eligible for Small Business Rate Relief.