A city centre investor has trebled his return after turning his rental flat into a holiday let via Airbnb. Sharon Dale reports.
Buying a one-bedroom apartment in Leeds city centre has been a good investment for Tom Harvey. For 10 years it generated a steady £600 per month in rent with no shortage of long-term tenants. Now, after turning the flat into a holiday let, he has trebled his income.
The switch was sparked by his background in hospitality and his use of Airbnb. The site, established in America in 2008, was set up to allow homeowners to let their spare room or an entire property for short periods.
He says: “I am a big fan of Airbnb and use it myself for short breaks and holidays. I thought I’d try my flat on the site to see how it went and I haven’t looked back. I put it on the site in March this year and it brings in an average of £1,800 a month so it has been very lucrative.”
Tom charges between £60 and £69 a night plus a £25 cleaning charge and most visitors stay between one and two nights.
“They range from business people to tourists and then there are those who are obviously having affairs. So far, there have been no problems and that’s the beauty of Airbnb, the host and guest both leave reviews on the site and no-one wants bad feedback,” he says.
While he earns £1,800 gross each month, the lets are labour intensive. He lives in a nearby suburb but travels into the city centre to meet and greet all visitors. He also does the cleaning and the laundry.
“I enjoy meeting and greeting guests and I am in a position where I can do that because I have my own business. My other job is mentally very demanding so I don’t mind the cleaning as I find it quite relaxing,” says Tom.
“My background in hospitality helps a lot. I am very alert to the things that matter so the décor is neutral, the bed linen is good quality and the towels are fluffy. I always make sure there are toiletries and spare toothbrushes in the flat, along with some food essentials like tea, coffee, milk and cooking oil.”
Most city centre landlords are not in a position to be so hands-on and, as yet, there is no agency to manage what is a cross between a hotel and a short-term holiday let. However, that could change and soon, according to Tom.
“I know of one couple who let their property out via Airbnb in the same way I do and they are thinking of setting up an agency to help other landlords do it,” he says.
The trend for converting long-term rental properties into holiday lets is growing, according to a new report by the Residential Landlords Association.
The RLA say city landlords are turning to Airbnb in record numbers after the government decision to penalise buy-to-let borrowers. From 2017, landlords’ ability to deduct the cost of their mortgage interest from their rental income will be phased out. Holiday lets are not affected by this clampdown as they are classed as a trading activity.
The RLA believe this loss of long-term rentals will fuel the housing crisis and drive up rents. Its latest report shows that more than half the Airbnb listings in London, Manchester and Edinburgh are whole flats or houses. Almost half are offered by people with more than one listing, which suggests that they are landlords. In London, the number of entire homes advertised on the site has jumped by a quarter in the last six months. There are no statistics for Yorkshire.
The RLA report says: “There is mounting evidence that Airbnb is drifting from its vision of allowing homeowners to occasionally rent out a spare room or rent their property when they are on holiday.”
Airbnb deny this and say that the average London Airbnb host shares their space for just 50 nights a year. However, Berlin has banned homeowners from letting out whole properties. In New York owners or tenants cannot rent their apartments out for short periods, less than 30 days, unless they are also living in the property. For those who want to use Airbnb for letting a spare room there are rich incentives.
The government has just increased its Rent-a-Room scheme allowance. This means that homeowners can earn up to £7,500 through Airbnb or from a full-time lodger without having to pay any tax at al.
For more details visit www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme