Hello Readers,
As the year rolls on and we hear of increased mortgage rates (again), it’s a challenging time to be a landlord, but those with a long-term perspective will generally always win over the length of time of their investment.
I’ve come across an interesting statistical tool this week that I thought I’d share with you before looking at an announcement by Airbnb that could be deeply worrying to some (rogue) landlords!
Significant Annual Rental Increases
This statistical analysis tool is put together by the BBC and provides the ability to see what rents are in your local area compared with one another since 2020. You can access the powerful tool here and I thought I’d share the stats with you for our local area.
For Medway rents have increased by 11.2% over the past year, with the increase from 2020 being a whopping 23%. Great news for landlords, but not such good news for tenants.
For Maidstone we see similar figures, with a 10.7% increase over the past year and a 22% increase since 2020.
Ashford, Dover & Folkestone tell a similar story, but have a slightly lower rent increase amount over the past 12 months. With these increases, I wonder how rents will look in the next four years. They surely can’t increase by another 25% as there must be a glass ceiling somewhere?
Airbnb To Start Sharing Data With HMRC
Something that has been a driving factor to these rental increases has been the rises to mortgage rates. This has impacted landlords operating under a limited company, but more so landlords who own property as an individual.
I am hearing more and more stories of landlords choosing to incorporate serviced accommodation as part of their strategy as the returns can be greater than a single let, however this is not without its risks as the Government is actively exploring regulation within the short term let sector.
It’s already confirmed that holiday home owners will be mandated to get planning permission to let their properties plans expected to come into force this year and there are proposals for a registration scheme too.
Needless to say, serviced accommodation is here to stay and one of the main platforms is the booking site Airbnb, which has come under significant criticism for being the main culprit for stoking problems around the availability of properties in some areas.
However… the data does not lie and an article I read recently outlines how the appeal of owning a holiday let has increased significantly against the background of a cost of living crisis.
Here are the headlines from a survey of 2,000 UK adults, carried out by holiday let mortgage lender Together:
- 24% Are considering becoming a holiday let owner (51% for 18 – 34 year olds)
- 48% Say they would consider short-term holiday letting as a way of earning extra money (65% for those over 55)
- 28% Would maximise the property they currently own
- 29% Say they would use it as a way of funding their retirement
I’m sure you will agree that this data is extremely insightful, however here’s the one point to consider. This is that Airbnb has shared data with HMRC on its hosts’ earnings going back as far as the 2017-18 financial year.
I am convinced that this action is something of a PR exercise for Airbnb, however it will send chills down the spine for any landlords who have undeclared income through the platform as they may find themselves facing criminal prosecution and tough penalties of up to 30% of the tax owed.
Anyone renting property in Airbnb can make up to £1,000 per year tax free, but anything over this needs to be declared. Where HMRC receives evidence that tax has been unpaid in a previous year, they can open an investigation to obtain information going back up to 20 years under so-called ‘discovery laws’.
Where landlords have undeclared rental income, the best thing they can do is voluntarily declare it through the Let Property Campaign as this would reduce the penalty. I strongly recommend using the services of an accountant to do this however.
What do you think to this announcement? It will certainly be interesting to see if there are any significant cases that come from it over the next few years and how much HMRC manages to claim back!
Hasan
