90 Days Later

April 3, 2017

As of end of March 2017, it is exactly 90 days since Airbnb announced their enforcement of London’s 90-day limit.  We thought now might be a good time to review what options are available for hosts, along with the respective pros and cons of each.  

For full details on the specifics of the “90 Day rule” and the reasons for its introduction by Airbnb, take a look at our previous blog on the subject.

For many “full-time” hosts, their Airbnb calendars are now beginning to look like this:

If you’ve benefitted from unrestricted and unpoliced Airbnbing to date, then you’re likely wondering what options are available to you. Here they are listed below as we understand them.

OPTION 1: Apply for planning permission from your local council, then carry on.

If you are granted planning permission, Airbnb requests that you complete an “Exemption form” and will unblock your calendar.  More information here.

Pros:

  • Fully compliant with local London regulations.

Cons:

  • You will face a period of no income as you go through the application process.
  • Planning permission is unlikely to be awarded to regular residential properties as it would set a dangerous precedent that others could then follow.
  • You will face higher taxation as business rates will apply (your property will be classified for commercial use vs. residential).

OPTION 2: Use your 90-day allowance on Airbnb, then exclusively market your listing for stays of more than 90 nights.

Stays of >90 days are technically not considered “short-term”, and therefore do not affect your 90-day limit.  This is recognised by Airbnb.

Pros:

  • Fully compliant with local London regulations.
  • Greater flexibility than a traditional long-term let (AST)
  • Higher yielding than a traditional long-term let (AST)

Cons:

  • Significantly increased risk of voids.  It’s significantly harder to find guests looking for stays of 90+ nights through Airbnb.
  • Typically guests booking multi-month stays expect a significantly discounted price, so are far lower yielding than regular short-term guests booking stays of <1 month.
  • Increased risk of problems arising from bad tenants.

OPTION 3: Rent your property to a long-term tenant on a traditional assured shorthold tenancy (AST)

Pros:

  • Benefit from a guaranteed monthly income in line with the rental market.
  • Fully compliant with local London regulations.

Cons:

  • Significantly reduced flexibility with regards to personal use of your property.
  • Typically significantly lower yielding than a property dedicated to short-term lets.
  • Tenants have more clearly defined rights than sharing economy “guests”. Read more here.

OPTION 4: Rent your property to a long-term tenant on a Service Let.

The Service Let is a unique, high-yield rental product that taps into the way people want to live today, turning any property into a fully-serviced living experience with integrated homesharing.  Read more here.

Pros:

  • Benefit from a guaranteed monthly income.
  • Outperform a conventional AST by 10%+.
  • Greater flexibility with regards to you personal use of your property vs. a conventional AST.
  • No voids. 100% occupancy.
  • Fully managed, hassle free service.
  • Fully compliant with local London regulations.

Cons:

  • Reduced flexibility with regards to personal use of your property vs. short-term lets.
  • Typically significantly lower yielding than a property dedicated to short-term lets.
  • Tenants have more clearly defined rights than sharing economy “guests”. Read more here.

CONCLUSION

The right option for you depends entirely upon two things: 1) the motivation that led you to hosting in the first place, and 2) whether you rent or own the property, and the terms of any lease that underpins it.

Irrespective of your situation, our team of trusted property advisors are on call to guide you through your options without any obligation.  Get in touch to book your free consultation.