Landlords warned of pitfalls in short-term letting on Airbnb
Landlords who turn to Airbnb and similar short-term letting platforms are warned to be careful in case they jeopardise their legal interest in the property.
David Alexander, joint managing director of Apropos by DJ Alexander Ltd, said it was understandable that many landlords see Airbnb as a viable alternative to long-term letting.
He said Airbnb has advertised potential revenues in Edinburgh of £1,959 a month, in London £3,563, and in Manchester £1,595, with differing figures across the UK.
"These numbers will appear very attractive to landlords who have falling rents in real terms, lower tax incentives, and increased management and maintenance costs," he said.
But he warned that landlords must inform their lenders and insurers if they are making this change; there may be considerable dead periods; the maintenance costs will be higher as properties must be cleaned more frequently.
He added that Airbnb is "coming under considerable pressure from numerous local and national governments in the UK and abroad" and has been banned in some cities.
“With Airbnb, you may find that you make more money for the peak five or six months of the year, but the winter is completely dead in which case your earnings may balance out," he said.
"The problem is that there is more work involved in dealing with 50 guests a year than in two permanent clients staying for a year.
"It is a balance and will depend on your expectations, your current experience of where your property income is going, and your location.”
He said London, Scotland, the South West and the South East collectively account for 73 per cent (163,300) of all listings, and a massive 78 per cent (£666m) of all income generated for hosts in the UK - figures which "highlight the importance in short-term letting of having a rental property in the right area."
He said the level of return, the guarantee of occupancy, the limiting of regulatory and financial restrictions, and the impact on the long-term value of the property investment, must all be considered by the landlord.
"It will work for some but could be a mistake for others," he said. "Equally, many landlords could substantially improve their earnings by reviewing their portfolio, their finances, and their individual circumstances.
"There is still a very good return to be made from the PRS, but it requires a professional approach.”