Short-term letting in London has become an increasingly popular option for landlords seeking higher rental yields. The rise of platforms like Airbnb has made it easier than ever to rent out properties for short periods, attracting tourists and business travelers alike. However, short-term letting comes with its own set of legal considerations and challenges. In this blog, we’ll explore the key factors landlords need to consider before diving into the short-term rental market in London.
1. Understanding the 90-Day Rule
In London, short-term letting is subject to strict regulations. One of the most important rules to be aware of is the 90-day rule. Under this regulation, property owners can only let out their property for up to 90 days per calendar year without obtaining planning permission from the local council.
- Planning Permission: If you intend to rent your property for more than 90 days in a year, you’ll need to apply for planning permission. Operating without it can result in hefty fines and legal action.
- Tracking Days: Keeping track of how many days your property has been rented out is crucial to staying within the legal limit. Many short-term letting platforms provide tools to help landlords monitor this.
2. Tax Implications of Short-Term Letting
Short-term rentals can generate higher income than traditional long-term lets, but they also come with different tax implications. It’s essential to understand how short-term letting income is taxed in the UK.
- Furnished Holiday Let: If your property qualifies as a Furnished Holiday Let (FHL), you may be eligible for certain tax benefits, such as the ability to offset mortgage interest against your rental income.
- Income Tax: Like any other rental income, short-term letting income is subject to income tax. Make sure you keep detailed records of your earnings and expenses to report them accurately on your tax return.
3. Ensuring Legal Compliance
In addition to the 90-day rule, landlords must comply with various legal requirements when operating a short-term let in London.
- Safety Regulations: Short-term rental properties must meet safety standards, including fire safety regulations, gas safety certificates, and electrical safety checks.
- Insurance: Standard landlord insurance may not cover short-term lets, so it’s essential to check your policy and ensure you have the appropriate coverage. Many insurers offer short-term letting insurance policies that cover risks specific to short-term rentals.
- Council Requirements: Different London boroughs may have additional requirements or restrictions on short-term letting, so it’s important to check with your local council before listing your property.
4. The Pros and Cons of Short-Term Letting
While short-term letting can be lucrative, it’s not without its challenges. Let’s explore the pros and cons of renting out your property on a short-term basis.
Pros:
- Higher Rental Yields: Short-term lets can command higher daily rates compared to long-term rentals, especially in tourist-heavy areas.
- Flexibility: You can choose when to rent out your property and use it yourself during off-peak periods.
- Diversified Income: Short-term lets provide an additional income stream, particularly during busy seasons like summer or holidays.
Cons:
- Increased Wear and Tear: With frequent tenant turnover, your property may experience more wear and tear, leading to higher maintenance costs.
- Management Intensity: Managing a short-term rental requires more time and effort than a long-term rental. From frequent cleaning to managing bookings, it can be a full-time job.
- Legal Risks: Failing to comply with the 90-day rule or other legal requirements can result in penalties, making it crucial to stay on top of the regulations.
5. Hiring a Short-Term Letting Management Service
If the idea of managing a short-term let seems overwhelming, consider hiring a short-term letting management company. These services handle everything from marketing and bookings to guest communication and property maintenance, allowing you to enjoy the benefits of short-term letting without the hassle.
- Marketing and Bookings: Short-term letting management companies optimize your listing, handle bookings, and ensure your property is marketed effectively to attract guests.
- Guest Communication: These companies take care of guest inquiries, check-ins, and any issues that arise during a guest’s stay, providing a seamless experience.
- Cleaning and Maintenance: Frequent cleaning and upkeep are essential for short-term lets, and a management company can coordinate these services for you.
Final Thoughts
Short-term letting in London can be a profitable venture for landlords willing to navigate the legal landscape and manage the additional responsibilities. By understanding the 90-day rule, ensuring legal compliance, and potentially hiring a short-term letting management company, landlords can maximize their rental income while staying within the bounds of the law. However, it’s important to weigh the pros and cons carefully to determine if short-term letting aligns with your investment strategy.
For landlords looking to simplify the process, House Manage offers expert short-term letting management services, handling everything from guest communication to legal compliance.
