Setting up and running a short-term rental business can be a lucrative venture, but first, you need to get to grips with UK vacation rental laws. Regulations can vary from city to city, so potential vacation rental property owners need to do their homework.
City and Regional Regulations
In certain cities, such as London, short-term rental regulations are enforced. These rules are in place to ease the housing situation and ensure the proper use and classification of properties.
However, vacation rental rules and regulations don’t just apply to the capital. If you’re planning on renting out a property as a vacation rental, you need to check holiday rental regulations city by city. Here’s a brief guide to some of the short-term regulations in place:
Planning restrictions are in place to govern short-term rentals. Properties can be classed as “temporary sleeping accommodation,” providing they are not rented out for more than 90 nights each year. However, not every local planning authority applies the “90-night rule,” so be sure to check whether you have the right to host short-term rentals in your area.
Edinburgh & Glasgow
Edinburgh City Council has recently outlined that property owners might need to seek planning permission to change their residential dwelling to short-term visitor accommodation. Local authorities should be able to clarify if that’s the case. Glasgow City Council also adopts the same viewpoint.
Northern Ireland adopts vacation rental laws too. If you are thinking of setting up a short-term rental business, you will need to obtain an official tourism certificate first.
Isle of Man
Property owners will need to register with the Dept of Enterprise in order to run a vacation rental business. If successful, you can host for up to one year.
Vacation rental laws and related tax can be a complex issue, as tax obligations are based upon your unique circumstances. HM Revenue and Customs (HRMC) require tax forms to be submitted by the end of January.
As a general rule, the income you receive as a vacation rental host is classed as taxable. Therefore, you might have to pay corporation tax or income tax. You might also be liable for Value Added Tax (VAT) if your taxable turnover exceeds £85,000.
Property owners might also be liable for business rate tax. UK rental properties available for more than 140 days each year are classified as self-catering properties, and therefore business rates apply. The rates vary depending on the location, size, and type of the property, as well as the number of guests it can accommodate.
You can check the rules surrounding the declaration of earnings online, and find out if you can claim any tax-free allowances. For instance, you can rent out a room in your home and earn up to £7,500 a year, tax-free, providing you are not sharing this income with someone else. If you are, the threshold is reduced by half.
It’s always a good idea to stay on top of your taxes! If in doubt, seek professional advice.
Vacation rental property owners must adhere to a number of legal obligations and official safety regulations to ensure the well-being of guests. Airbnb also offer guidelines, encouraging responsible hosts to:
- Adhere to gas safety regulations
- Install a carbon monoxide detector
- Provide and maintain a working fire-extinguisher and fire alarm
- Maintain fire safety compliance and conduct a safety risk assessment
- Identify fire escape routes
- Provide clean water (in line with HSE guidance)
- Ensure all electrical appliances are safe and in good working order
- Ventilate your property and service boilers, heaters, and AC units
- If you are welcoming families, provide a safe environment – consider stair gates, window locks, and slip-mats in showers/baths
- Point out potential hazards in your listing – if your home isn’t child-friendly, be sure to inform potential guests about the dangers (e.g. unfenced pond)
- Make sure you check and adhere to occupancy limits
Local Rules and Customs
As an upstanding vacation rental owner, you should also be mindful of local rules and customs. Neighbours might not relish the idea of having an Airbnb next door, so try to get them onside early on. Minimise problems by communicating your expectations to your guests via a set of well-thought-out house rules:
- Communicate rules for communal areas. If you have a shared bathroom or kitchen, encourage guests to leave the common rooms clean and tidy!
- Stipulate conditions regarding noise. You could enforce this by vetoing loud parties and asking guests to keep noise to a minimum after 11 pm. Other noise-reducing measures include not allowing pets in your rental and prohibiting additional visitors.
- Parking can prove a contentious issue too! If you live on a busy street, you need to reiterate parking rules to your guests. If it’s on-street parking, ask your guests to take care not to block driveways or entrances.
Get to Grips with Vacation Rental Laws
It’s essential that you understand vacation rental laws and regulations prior to establishing your vacation rental business. The last things you want to face are legal issues and legal challenges when you’re trying to make a success of your Airbnb enterprise. Start as you mean to go on by drawing up a comprehensive Airbnb business plan in compliance with the vacation rental laws, and establish yourself as a trustworthy host.
By Inna Shevchenko, Chief Marketing Officer at iGMS
Inna has over 12 years of experience in marketing and content writing specifically. Currently, she is the CMO at iGMS, a short-term rental management software company.