Would you rent out your home to a complete stranger for a night? Many people in Liverpool are doing just that through a host of new websites offering the use of homes for short stays in cities. But what are the pros and cons of offering your home as a holiday property?
“I’ve got a guest staying tomorrow who is going to the Tate Gallery and another from Sweden coming after that. There’s four different guests from four different countries coming and I’m booked up until May,” says Chris, whose flat overlooking Liverpool’s docks is one of the latest to be offered to visitors on a pay-per-night basis in the city.
With major events including the visit of Cunard’s Three Queens and Sound City on the horizon, it is a chance for Chris to make money from his home while he works away.
“I couldn’t be in a better spot for the ships coming in because they park right outside my window! All the hotels are booked up so the earning potential is huge. I’ve had enquiries about the artists for Sound City about them staying here as well. I’m not really doing it for huge profits but it does help with bills.”
Chris uses Airbnb, an online portal that puts visitors to the city in touch with homeowners who are willing to rent out their properties. It is one of many available, with Windu, SpareRoom.com and HomeAway all offering options for people who do not want to use a traditional hotel or serviced apartment.
The concept is simple; homeowners list their property on a website with a nightly price. Once somebody books, the owner collects the money and hand over the keys to their apartment, much like a hotel. Unlike a buy-to-let property there are no permanent tenants and the furnishings and belongings in the flat are all the owners.
According to Airbnb, homeowners have embraced the new craze. James McClure, general manager for UK & Ireland, says: “We are seeing an astonishing level of growth for people using the website, both as hosts and guests. In Liverpool alone, inbound travellers using AirBnB have risen by 180%, and outbound travellers by 145%. In the UK, we have seen a 143% growth in both inbound and outbound travellers choosing to use AirBnB.”
Airbnb’s UK Economic Impact Study says 63% of hosts say that their income helped them to pay bills that they would otherwise struggle to pay, and 44% said this income helped them afford to stay in their homes.
“However, the appeal of hosting extends far beyond financial reasons – hosts enjoy meeting people from all around the world and have had life-changing experiences through engaging in in our community,” adds James.
The main concern for new users of the services are theft and damage to property. With homes filled with personal possessions being offered to strangers, what can be done if thefts or damage occurs?
James says: “Property damage issues for hosts are extremely rare. The Host Guarantee provides hosts with additional peace of mind. In the rare event of guest damages, it is designed to reimburse hosts for up to $1 million (£600,000) in damages to eligible property.”
While earning some extra income may be appealing renting a room out even for a night does need some careful planning because doing so can impact a user’s tax, mortgage and home insurance.
The first port of call will be to a home insurer, which may argue it invalidates a policy if strangers are staying in the house. An insurance policy that covers renting out the apartment may be rare and will mean higher fees.
Luckily, there are exemptions when it comes to income tax. Julia Casimo, director at John Kerr Chartered Accountants, says: “Although not designed with the likes of AirBnB in mind, HMRC introduced a relief known as ‘rent-a-room’ relief many years ago. It gives exemption from income tax as long as the annual level of income is less than £4,250 per property per year, the room(s) let are in a main residence (i.e. you must live there), and is available for homeowners and tenants.
“Of course the rules are much more detailed than this – so people thinking of letting a room in their house should check out the HMRC website guidance or speak to an accountant.”
If you vacate your home for shorter periods to rent it out you will also need to contact your mortgage advisor, says Lynn Storey of The Advice Centre, which has partnered with local estate agent Abode.
She says: “It’s a bit of a grey area. Renting your home out for a couple of nights would not fall under a buy-to-let mortgage but before you do it you should contact your mortgage company. When taking out a mortgage or remortgaging you will have to disclose this information and it will then be up to the individual underwriter to rule on your circumstances and decide if they can offer a mortgage.”
As Liverpool prepares for a raft of spectacular summer events, the rise of the rental home is expected to continue – and with the right advice anybody can do it.
For Chris and his Liverpool property, it is a service he will continue to use. He says: “It’s really easy to do. People are there because they want to save cash and go exploring so just embrace it!”
