Should you rent out your spare room on Airbnb?

If you’ve searched the internet for accommodation in the last few years, you’ll have been unable to ignore the rise of property sharing service Airbnb.

Hyped as the method-of-the-moment to travel cheaply and stay in comfortable surroundings, the website connects travellers with people willing to rent out their home or a spare room.

Thinking of renting out some or all of your property in this way?

It’s certainly tempting, whether you want to list a dedicated holiday home, rent out your house whilst you’re away, or simply make some extra income from that empty spare room.

But before you do anything, there are some potential pitfalls you should consider.

Breaching contractual agreements
If you don’t own your property outright, you’ll need to check your mortgage or lease agreement for clauses governing how it can be used. It is often stated in contracts that the property must only be used as a private residence.

The introduction of property sharing services such as Airbnb has caused something of a legal grey area. Recently the Upper Tribunal (Lands Chamber) ruled that the owner of a flat breached the terms of her lease by granting a series of short term lets, a decision which is expected to have a knock-on effect to other hosts who let out a whole property. The ruling does not seem to affect those who permanently occupy their property whilst letting out a single room.

Licensing and regulations
When money changes hands, you’re legally responsible for ensuring your property reaches the same regulatory standards which apply to hospitality providers like hotels – for example obtaining gas safety certificates, providing fire safety equipment and maintaining boilers, air conditioning systems and cleanliness. It’s advised that you contact your local authority for guidance on compliance. Failure to do so could leave you legally liable in the event of an accident or other claim.

Money you make from property sharing could need to be declared as income to HM Revenue & Customs, depending on the amount of money you make and your personal circumstances. In 2015, Airbnb was ordered by Dublin’s tax officials to hand over details of hosts it believed weren’t fully declaring tax. Britain’s rent-a-room allowance lets you earn up to a threshold amount per year tax-free. Make sure you know the legal requirements to avoid receiving a nasty tax bill or facing legal action.

Some property sharing sites including Airbnb do offer host protection, offering basic cover or guarantees to their hosts. But these schemes do have limitations, often excluding cash, electronics, personal injury, and more. It is advisable to take out your own buildings and contents insurance as well.

You must tell your insurer that the property will be used for short-term letting before taking out a policy or if the usage of the property has changed. If you have insured the home for residential use, and it is found to have been used for letting when a claim is made, the claim may not be paid out and the policy may be avoided on the grounds of misrepresentation or non-disclosure.

If you intend to rent out your property on Airbnb, talk to us about a flexible insurance solution.