Airbnb… what’s the catch?

airbnb property letting rules

Due to the changes mortgage interest taxation on buy-to-let properties landlords are looking at ways to maximise the return on their property investment, as well as minimising the impact of the new taxation.

One solution to this has been to rent property on short term let through Airbnb, whilst there is the cost of furnishing the property and cost / time of turning it around between each let it can generate a lot more income from the property.

This question is being asked more and more by clients particularly as locally there is a market for people travelling with work and employees on short term contracts. I was asked this week other than furnishing it and cleaning it what were the pitfalls of letting a property through Airbnb and what did the client need to consider?

What do I need to consider when letting through Airbnb?

Tax Advantages

There are significant tax advantages to having a property on short term lets as it can be as for tax purposes it is classified as a ‘Furnished Holiday Let’, especially for Landlords that have a mortgage on the property as the interest is deducted as a cost of the rental. For example, a property that was rented at £600 per month with mortgage interest of £300 could save £60 per month in tax. There are also significant tax advantages when you come to sell the property due to additional reliefs that are available.

For your property to be classified as a ‘Furnished Holiday Let’ it needs to be:

  1. be available for let for 210 days

  2. be let commercially as a holiday property for 105 days

  3. if it is let by the same person for more then 31 days there must not be more than 155 days of these longer lets

Costs of the let

All the costs of the let are deductible against the income received. These can include utilities, phone lines, provisions, cleaning costs, mileage, repairs and maintenance. One of our recommendations is to keep a separate bank account so that the costs are easily identifiable for the property, you do also need to keep all your receipts.


The cost of furnishing the property can be offset against the rental income. You do need to consider the standard to which it is furnished, the older more tired properties tend to let less often and for less money than refurbished higher spec properties.


Short term lets need a different insurance policy to a standard landlord’s policy, due to there being more furniture and fixtures, accidental damage and public liability to cover. You may want to talk to your broker to ensure that all liabilities are covered.

Turn around

As well as the cost of cleaning additional time will be involved in turning the property around, one of the key problems landlords that have is finding reliable cleaners. Landlords need to keep track of the additional profit made on the let against the time involved, as on occasion the extra profit is not worth the time involved.


You will need to check the terms and conditions of your mortgage to see if you can let the property out on shorter lets, a lot of buy to let products don’t permit this. There are specific mortgages for Holiday Lets and it is worthwhile contacting your mortgage advisor to make sure that you are covered. Lenders will be aware when you apply for a re-mortgage that you have been letting as this way as the income is classified differently on your tax return.

Council Tax

When a property is let out on short term basis it will be rated for business rates, if you rent more than one property or get more than £15,000 in rent for you won’t qualify for small business rates relief. This will be an additional cost to the let.

Empty Periods

Properties that are on a short term let will have periods of time that they are empty and not earning rental income, Landlords need to be prepared for this and monitor them especially if there are no bookings for a period of time.

Done correctly Airbnb can be a great way to maximise the return on your investment, as well as being more tax efficient but there is a lot more time and cost involved. Airbnb will also only suit certain property types, so whilst the numbers are important there are the practical considerations to consider too. If you are considering short term rental and need more detail please contact us.

Carrie Stokes Chartered Accountant

Carrie Stokes Chartered Accountant

I work with directors of limited companies in Shropshire, Staffordshire and the West Midlands giving them a clear and up to date financial picture of their business that they understand. Looking at the numbers, what they mean and how they can be improved to grow their business.

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