Help for landlords who want to switch to Airbnb

Dave Hanson's apartment let through Airbnb
Dave Hanson's apartment let through Airbnb

An entrepreneurial couple are helping city centre landlords turn their flats into Airbnb pads. Sharon Dale reports.

Turning a conventional city centre rental property into an Airbnb pad can be lucrative and tax efficient but it’s also labour intensive.

That’s why some landlords have been loathe to make the change even though the returns can be double and, in some cases, more.

Airbnb, established in America in 2008, was set up to allow homeowners to let their spare room or an entire property for short periods. Managing bookings, meeting and greeting guests, cleaning, changing beds and stocking the fridge are all part of the workload if you are a host offering to let a “whole house or flat”. It adds up to a huge amount of work and a lot of to’ing and fro’ing.

Now, one entrepreneurial couple have come up with a plan to make it much easier. Dave Hanson and his partner, Sanita, have launched Palis, a business specialising in servicing Airbnb apartments in Leeds city centre.

They already have plenty of experience after managing Dave’s two-bedroom duplex and providing holiday cover for a property owner in the same building. Sanita also has her own cleaning company and has worked in housekeeping for top hotels.

Dave, who also owns a printing business, says: “We moved into a house in Morley together, which left me with an empty flat. I decided to give Airbnb a go but I’d never used it myself so I went to stay as a guest in other properties to get a feel for how it worked. I put the flat on the site and the response was amazing. I got a two-week booking within 12 hours and I am now making more than double what I would’ve got if I had rented it out on a shorthold tenancy.”

He has let the apartment for just over a year and charges £99 per night for a weekday and £125 per night at weekends. His guests have ranged from academics visiting nearby universities to weekenders and those visiting family and friends.

The flat is now classed as a holiday let, which is more tax efficient than a conventional buy-to-let property. From April this year, landlords’ ability to deduct the cost of their mortgage interest from their rental income will be phased out. Furnished holiday lets are not affected by this clampdown as they are classed as a business. This classification also means that capital gains tax is levied at 10 per cent rather than the 20 per cent for conventional rental property. To qualify, your property must be available at least 210 days of the year and has to be let for at least 105 days.

Those letting their own main residence through Airbnb will not have to declare or pay tax on the first £1,000 they earn under rules that start from April this year. More generous is the Rent-a-Room scheme, which allows homeowners to earn £7,500 through renting a room in their home via Airbnb or by renting to a full-time lodger without having to pay any tax at all.

Dave and Sanita’s business was born after helping their neighbour, Tom Harvey, look after his one-bedroom apartment when he was away. Their prices start from £30 to clean, change the beds and greet guests.

“We realised there was a need so we are offering everything from cleaning, washing, ironing and restocking to greeting guests through to full management, including dealing with bookings,” says Dave. “We can do it full-time if needed or as holiday cover, as we do for Tom.”

For 10 years, Tom let his flat for £600 per month in rent with no shortage of long-term tenants. Since letting the property in Airbnb, he has trebled his income to an average of £1,800 a month

Both he and Sanita have a background in hospitality, which has helped enormously as on Airbnb you live or die by your ratings. She says: “Cleanliness is very, very important. One bad review can really affect your ratings.”

While Dave and Sanita’s let is successful, they had to learn the hard way to begin with. He says: “You have to check your guests’ feedback. Right at the beginning we didn’t do that and let it to a young girl who was new to the site so she had no reviews. She had a party with 17 guests and left the flat in an awful state. We didn’t make that mistake again.

*For details of Palis Airbnb service visit paliscleaning.co.uk