One in three Landlords are moving towards short term lets due to changes in mortgage interest relief, a recent report published by the Residential Landlords Association (RLA) indicates.
It may be cheaper to Rent your property on sites like Airbnb because of changes to tax rules for buy-to-let landlords.
As the end of 2017 is near it is important landlords are fully up to speed with legislations and the upcoming changes to the market. We have previously reported that landlords are planning to increase rents to help cope with recent tax changes and also discussed how landlords can maximise yields and profit.
However it seems that an increasing number of landlords are finding that Airbnb and other similar platforms could be more lucrative than the standard model of longer tenancies.
By 2020/1 landlords will no longer be able to deduct mortgage interest along with other costs from their annual tax while returning tax incentives on the other hand could mean good news for those who rent or are looking to rent on a short-term basis.
‘Micro-entrepreneurs’ who let their properties on sites such as Airbnb receive a £1,000 allowance from the government. This perk was announced as part of the 2016 Finance Bill, however it was left out at the last minute before appearing again.
RLA shows that the number of buy-to-let investors who rent on Airbnb have seen an increase of over 50% between February 2016 and March 2017.
Short term lets on average yield a higher rent, for example current data from Zoopla reveals that the average one-bed flat in London is let for £1,618 per month while a single private room on Airbnb can make £1,632.
In comparison a whole property rent out on Airbnb can return as much as £2,700 a month. The rent a room scheme also means that the first £7,500 earned from letting out a furnished room, guesthouse or bed and breakfast is tax free. This tax break also applies to short-term lettings such as those on Airbnb.
Unfortunately, this has its cons too. The Spring Budget suggested the rent-a-room tax break would be removed for short-term lettings, resulting in losses of up to £3,300 a year for Airbnb hosts.
Some sites also have restrictions on the maximum time you can let a property for. Airbnb gives a 90 day on all lets. Moreover according to the Telegraph the average shortaverage short-term letting on Airbnb earns a landlord just £2,000 a year – less than a fifth of the average UK income from rent.
If you are renting out your property on Airbnb, Discount Landlord can provide you with specialist Landlord Insurance – call 0800 294 4522 to get a quote.
This post first appeared on Get A Discount Quote On Your Landlord Insurance To, please read the originial post: here