Home From Home or House of Horrors?

Airbnb: Home From Home or House of Horrors?

Airbnb has hit the headlines recently with the announcement that HMRC is cracking down on tax evasion on income earned by people who rent out a property.

With reports of properties being badly damaged by renters who have held ‘wild parties’ – leaving hosts with huge cleaning bills – also regularly hitting the headlines, Nicole Rogers, a solicitor at DAS Law, answers the most important questions for existing Airbnb hosts and those thinking of renting out their properties…

If your property or belongings are damaged or stolen, will your home and contents policy cover you?

It is unlikely as the insurer will not usually have catered for paying guests when arranging the policy. The host would need to clarify with their insurer as to whether their cover would be sufficient to cover losses. Airbnb does offer a ‘host guarantee’ whereby the firm promises to reimburse hosts for damages of up to £600,000, although the company adds that hosts should not consider this as a replacement for owners or renters home insurance.

Whilst a host is not required to take out specific landlord insurance, it would be advisable to speak with a specialist broker or insurer to ensure sufficient protection.

Could sharing your rented or leasehold property with Airbnb cost you your tenancy or home?

Millions of Airbnb users may have unknowingly breached the terms of their leases, leaving them vulnerable to legal action or the loss of their tenancy.

The vast majority of tenancy and leasehold agreements are likely to state that the property in question may only be used as a private residence. This would prevent tenants from renting out or ‘sharing’ their flat or home for short periods. Anyone letting their property out through Airbnb should, therefore, check their tenancy or leasehold agreements first.

It is not just those renting who should be wary of breaking contracts – mortgage companies may also take a dim view of homeowners offering short-term lettings of their property. It would be wise for owners to contact their mortgage company before offering their home out as they may very well be breaking their mortgage contract. Whilst buy-to-let mortgages allow for assured short-term tenancy, ‘short-term’ is often defined as six months; clearly, Airbnb stays are considerably shorter than this.

What are the tax implications for the income you receive?

Money received from hosting is generally regarded as income. Therefore, it is likely that income tax will be payable so the host may need to declare their earnings to HMRC. It is also possible that a host may be entitled to certain tax reliefs or allowances, so it is advisable to take tax advice regarding this.

What precautions do you need to take to comply with health and safety legislation?

Hosts must ensure that the premises are reasonably safe for visitors. With regards to fire safety, landlords should inform visitors of a fire evacuation route. The Regulatory Reform (Fire Safety) Order 2005 makes landlords responsible for taking steps to protect the people using your premises from the risk of fire. This means that a host should carry out a fire risk assessment and, if necessary, improve the fire safety measures while keeping the risks, and fire safety measures, under review.

If a visitor has suffered an injury at a host’s premises, he/she may seek to pursue a personal injury claim, particularly if the host has breached their duty of care to the visitor, which subsequently has caused foreseeable injury.

As an Airbnb host, do you need to have public liability insurance?

There is no legal obligation to take out public liability insurance to host via Airbnb. However, it would be worthwhile to do so in order to protect yourself – the host – in the event of an injury claim from the visitor.