Letting out your property on a daily basis, using the increasingly popular accommodation website AirBNB and similar sites such as Booking.com, is something that more and more property owners and landlords are considering at the moment. In many places, there seems to be very good demand for daily rental accommodation.
Also, the possible rents look very favourable compared to what can be earned from say a monthly tenancy. It’s quite possible, for example, to make the same amount of rent from letting a property for a week on a short term letting basis as it is from letting it out for a month on a standard annual tenancy. So potentially, assuming a high level of AirBNB lets, your yield from daily letting could be up to four times higher.
However, as well as being quite a new idea, this kind of letting business is unusual in many ways – falling as it does part way between a normal letting business and a hotel style operation. So here are some of the things you need to consider before getting into the AirBNB style daily lettings business:
* What about your mortgage? Assuming you have one of course. Most standard mortgages don’t allow sub-letting, and even buy to let mortgages might not allow daily letting. Be sure to check where you stand if your property is mortgaged.
* What about your lease? If your property is leasehold, as is very often the case with apartments, that lease probably won’t allow daily letting ….. and occasionally it might not allow sub-letting at all.
Consider what the management company’s attitude (if there is one) is to daily letting. as well as your neighbours’ likely reaction.
* Property insurance. Normal buildings and contents insurance probably won’t cover you for daily letting.
You might need landlord insurance instead …. but even that probably won’t cover you when the property is void or empty.
* What sort of tenancy agreement will you have with those who let your property? Will it be, for example, an assured shorthold tenancy (AST) or a licence type arrangement?
It’s best to take legal advice on this. You wouldn’t want your tenants, guests or whatever you might call them to establish long term tenancy rights …. or fall foul of landlord and tenant law by not providing them with the necessary tenancy agreement.
* Could your property be considered a HMO or house in multiple occupancy? This could be the case if you’re letting your property on a room-by-room basis. HMOs need planning permission and a licence in some cases and in some areas.
Here’s some more information about HMOs
* What other legal considerations might be involved? For example, you might need an EPC for your property, a gas certificate and smoke alarms. You might also need to make ‘right to rent’ checks on your tenants.
* What will you provide in your property? Daily rental properties usually need to be much more comprehensively equipped than those rented by the month. You’ll usually need to provide all furniture, a fully equipped kitchen, bed linens and maybe laundered towels as well. A good Internet connection is pretty much essential too.
* Who’ll service the property …. and what will it cost? Your accommodation will need to be cleaned between lets, you might need someone to meet/greet guests …. and there’ll need to be someone available 24/7 in case of problems or emergencies.
Will you do this yourself or used some kind of managing agent? If so, what will the cost of this be?
* Who will you target/accept as guests or tenants? For example, those offering daily lettings sometimes aim their accommodation at business travellers, at contract workers or at tourists. Decide who you will/will not accept and whether there is likely to be demand from your chosen customer group. To a greater extent this depends on the area your property is located in.
* Do all the numbers stack up? Although the rents you can earn from daily letting are higher the expenses and running costs (and possible pitfalls) are much greater too. In particular consider such aspects as AirBNB commission and increased wear, tear and repair costs. So work through the numbers and ensure that at the end of the day your daily rental accommodation can still return a good profit.
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