Renting Property | Latest News

Over 80,000 UK property owners earn income from renting their property out via online sites such as Airbnb. Whilst this is common place and growing in popularity due to the tax relief given to individuals, there are a number of pitfalls to be aware of.

Did you know:

* In London you are not allowed to use your home to provide temporary sleeping accommodation for paying guests for more than 90 days without requiring planning permission for change of usage.

* You need to obtain permission to let a property from your mortgage lender.

* By letting out a property you can invalidate your insurance cover, you need to seek specialist ‘landlord’ insurance.

* As a landlord you are required to have certificated gas safety checks, annually.

* Fire regulations apply to furniture and there are rules regarding providing adequate smoke alarms and even carbon monoxide alarms if there is an oil, coal or wood burner in the property.

In addition to the above, Leaseholders in England and Wales have to be aware of the law, rules and regulations that they must adhere to. Be mindful of the consequences of sub-letting and breaching the terms of the Lease, which ultimately could be eviction by the Freeholder.

* By letting the property on Airbnb you could breach the usage clause, which restricts use to that of private residence only and not carrying out any business in the premises. A case recently stated ‘private residence must have a degree of permanence’ therefore a few days or weeks rather than months is a breach.

* You are ultimately responsible for any noise from your guests, Local Authorities will pursue you.

The owner of the Freehold can, if you sub-let without permission apply for possession proceedings, risking eviction due to a breach of their assured shorthold tenancy agreement. Whilst there is speculation that the ‘irredeemable situation’ of an Airbnb guest being in a property is unlikely to result in a grant of possession, it is likely to be very costly to argue in court, is it really worth it?

Finally, renting out a room to help out with bills or even a creative way to avoid rental income tax utilising current tax breaks via online sites, whichever category you may fall into, the bottom line HMRC class this revenue stream as earned income. In 2013 HMRC launched ‘The Let Property Scheme’ encouraging those owing tax to do so. They are concerned that professional landlords are using sites such as Airbnb to avoid taxes, under current tax rules you can earn up to £7500 per annum renting out rooms or entire homes for short periods. They also highlight renting out property in this way for more than 90 days breaches housing regulations as mentioned above. They have said someone completing a Self-Assessment tax return who has made a simply careless mistake when declaring income will only pay tax for up to six years no matter how many years they are behind, however, deliberate avoidance will carry greater penalties, going back up to twenty years and even a criminal investigation. Food for thought.

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