Two new UK tax breaks fuel a surge in homeowners renting out rooms
Two new tax breaks for 'micro-entrepreneurs' are set to increase the popularity of holiday rental websites as homeowners will be permitted to earn up to £1,000 a year tax-free through whole property rentals. Further, taxpayers will be able to earn up to £7,500 a year tax free through room rentals in their home. The tax breaks will allow homeowners to receive a higher rate of tax-free income, while the number of UK properties listed for short or long-term rental is set to increase even more after doubling over the past 12 months.

The UK is fast becoming a powerhouse for online holiday rental websites such as Airbnb, thanks to two major changes that give homeowners the chance to receive more tax free income.

Since April 6, taxpayers have been able to earn up to £7,500 a year renting out a room in their home without paying tax – a significant increase from the previous £4,250 threshold.

The popularity of these websites is expected to increase further when a new tax break for ‘micro-entrepreneurs’ applies from April next year. Homeowners will be permitted to earn up to £1,000 a year tax free from renting out a whole property on homesharing websites.

Floating office: Quirky locations include a houseboat in King’s Cross, Central London

The website allows anyone to list rooms or properties online for short or long-term rental, says its UK listings have doubled to 80,000 in the past 12 months and it expects the trend to continue. Hosts pay the website a 3 per cent fee, while renters pay 6 to 12 per cent

A spokesman says: ‘The new tax break is good news for the growing number of hosts in the UK who are sharing their homes, earning a little extra money to pay the bills.’

There are pitfalls to consider before taking the plunge. There have been reports of wild parties and police involvement at properties rented out using Airbnb. In what is thought to be the first court case of its kind, a judge recently ruled against the tenant of a flat in Brixton, South-West London, who was renting a home on the website. The neighbours had complained about noisy parties and the tenant was found to have breached his lease agreement.

One host from Forest Hill, in South-East London, claimed his guests caused £12,000 worth of damage to his luxury new-build home during a New Year’s Eve party to which police were called.

And a host in Fulham, South-West London, found a guest holding a party for 100 people in her flat. She was allegedly assaulted when she tried to shut the party down.

Airbnb says such problems are ‘extremely rare’ and it points out that hosts are protected by certain guarantees. The spokesman says: ‘When we are made aware of issues, we work fast to put things right.’

The company says the guests who held the problem parties have been banned from the website. It adds that it is reimbursing the hosts for the damage.

'Our guests help us pay for holidays' Key location: Joel Lumsden and Alex Hepworth live near the Edinburgh Festival Joel Lumsden, 31, and his girlfriend Alex Hepworth, started renting out the top room in their house using Airbnb during last year’s Edinburgh Festival. Joel says: ‘It has been pretty consistent since then with a couple of lettings a week. It’s a double room in a quiet area with a nice view across the Firth of Forth.’ The couple are now named as ‘super hosts’ thanks to the five-star reviews given by their guests. ‘We’ve met lots of interesting people and because the website has really grown in the last six months a lot of them have been first-timers. ‘You never know quite what to expect. Some are happy sitting in the living room with us, but others have been more hands off.’ Joel, who works in internet marketing, and Alex, who is employed at the city’s Heriot-Watt University, are saving the money they are making for travelling. ‘It goes straight in to the holiday fund,’ says Joel. His main criticism is that he feels the company could do more to explain its policies to hosts. He says: ‘There is a lot of confusion about what will happen in bad situations. ‘I think a lot of people go into it without knowing exactly where they stand.’ <!- - ad: https://mads.dailymail.co.uk/v8/ru/money/moneymortgageshome/article/other/mpu_factbox.html?id=mpu_factbox_1 - ->

In general the company says it covers hosts for ‘eligible damages’ up to £600,000. Hosts are also able to add a security deposit to their listing but if they wish to claim on this they must do so within 48 hours of checkout.

Not everyone is convinced that hosts are fully protected. Dan Weber, the founder of website Airbnbhell, is a disgruntled former US host who believes the company allowed guests to take him for a ride.

He initially thought the website was ‘an amazing concept’, but he says he was left out of pocket after a British couple who had stayed in his property for almost six months filed a complaint two days before they were due to leave. The pair claimed there were rodents in the property and Airbnb handed them back half of their money.

Weber insists the images provided by the tenants were fraudulent. He says: ‘This couple got back several thousand dollars.’ His website features tales from disgruntled hosts and guests all over the world – a third from Europe.

Boom: Websites including Airbnb and Vrumi are gaining in popularity

Would-be hosts using Airbnb and other websites such as SpareRoom and mondaytofriday have other issues to consider – such as how their mortgage lender and home insurer will react.

Ray Boulger, mortgage expert from broker John Charcol, warns that such services are a ‘grey area’ for lenders. He says: ‘Although they do not usually have a problem with lodgers staying in a home, all mortgage contracts contain a clause stating that you can’t let a property without the lender’s permission.

‘I would advise anyone planning to do this to contact their lender first. If letting more than one room on a casual basis rather than long term, it gets complicated as it could be argued that one is running a B&B, which is a business and has other implications.’

Kevin Pratt, home insurance expert at comparison website MoneySupermarket, says: ‘It is vital to check with your home insurer first as otherwise you could invalidate your insurance. You may need to pay a higher premium.’

Landlords need to be vigilant as tenants may be subletting rooms without their permission.

Paul Shamplina, lawyer and founder of legal website Landlord Action, says: ‘I have been receiving a growing number of instructions from landlords whose tenants have sublet their property via Airbnb without their consent.’

Landlords can do a postcode search of the website to see if rooms in their property are being offered for rental. Shamplina adds: ‘Airbnb says it asks for tenants to obtain consent from their landlords before subletting, but does not ask to see this consent.’