HMRC have announced that Airbnb has agreed to share data about its hosts and their earnings. We see this as good news as the 'amateur' hosts have flooded the market with property at marginal prices, making it harder for professional landlords, who incur all the costs of running a business professionally as well as paying taxes on revenue or earnings, to compete.
According to propertynotify "The forthcoming investigation by HM Revenue and Customs (HMRC) into Airbnb landlords may be the last straw for growth in the short-term lettings market. Apropos, a UK-wide property management firm, believes that the announcement that Airbnb has passed on the financial transactions of 225,000 people who rent out homes and rooms through its site will potentially signal a significant exodus of landlords from the short term letting sector.
Airbnb has done this as part of a deal with HMRC over its own tax liabilities and could potentially result in substantial bills for all landlords but particularly those who operated multiple properties through the site."
Our own Serviced Accommodation expert and committee member, Charlotte Walker said, "Those under the rent a room threshold (For Lettings in their own home) have nothing to worry about. Likewise those at the professional end of the spectrum are largely aware of their obligations. This will hit those in the middle. A furnished holiday let does not become so for tax purposes until it has been let for 105 days (and available for 210 days) in a year(if beneath this threshold it can go in as rental income). If your FHL business has grown beyond this threshold you need to submit the FHL pages on your tax return or use a Ltd. Company to run what has become a business. The second threshold to be aware of is the VAT limit of £85000, once you have reached this turnover (this can be achieved with 2 or 3 properties locally, so quickly reached) you must register for full or fixed rate VAT. If you are involved in arbitrage (rent to rent) other VAT schemes such as the Tour Operators Margin Scheme may apply.
It is easy enough to put your affairs in order if you are worried, you can amend previous tax returns so I would urge all members to check that any Airbnb income is correctly accounted for.
David Alexander, joint Chief Executive Officer of apropos, said: "Since the start of pandemic we have had hundreds of former Airbnb property owners approach us about shifting from short to long term letting. They correctly predicted that nobody would be holidaying or travelling and therefore their incomes would dry up over the course of this year. It was not hard to see the appeal of short term letting in financial terms, but many landlords may have entered this market somewhat naively and without fully understanding the implications. There are higher rents for short term lets but also greater obligations and costs in terms of managing the property.
Greater cleaning and maintenance costs, higher insurance premiums, and the expectation that more damage is likely to be caused by a short-term tenant than someone who wants to establish a home in your property. All of these factors alongside potential high tax bills will have put many landlords off remaining in the market. With the pandemic continuing for the foreseeable future I believe that the shift from short to long term letting will become more pronounced in the coming months as more property owners see their incomes shrink. This, coupled with potential tax demands before Christmas, is likely to see further large tranches of property released on to the long-term letting market as owners seek to recover some of their losses from the first part of the year."
Written & oral information and advice from the Portsmouth & District Private Landlord's Association is given in good faith, but no responsibility whatsoever is accepted by the Association or it's officers for the accuracy of it's information & advice nor shall the Association be held responsible for the consequences of reliance upon such information.