Whether you want to start an Airbnb business for some on-the-side cash or have bigger ambitions, there is some crucial groundwork that needs laying before you enter the sharing economy.
To give budding hospitality entrepreneurs a head start, two successful hosts share with Business Advice readers the essential starting points, before an accountancy expert outlines the tax responsibilities of an Airbnb business owner.
Kieran and Katie Tynan both gave up jobs at the BBC in London in June 2017 to pursue their dream of living in rural North Wales. The property they found near Snowdonia National Park – a popular destination for tourists – came with an abandoned static caravan.
After restoring it to full working glory, adding a strong sense of personality with a retro tropical theme, the duo opened The Tropi Caravan. After two years in business, this is what they’ve learned.
Check permissions with your local council
“It’s worth knowing that some councils, including all London local authorities, require you to reregister the ‘change of use‘ if your property is going to be rented out for more than 90 days a year. This means you’re changing the “use class” of your property from a private home to C1 hotel class.
“It’s also worth checking planning permission too if you are thinking of adding any additional dwellings to your land such as converting a barn.”
Find your USP
“For us, the theme was really important as we wanted to stand out from the crowd with something a bit quirky. In Conwy and Denbighshire, static caravans are everywhere, so we wanted to do something a bit different. We went for a retro tropical theme complete with cheese plant wallpaper and pink flamingo artwork. It’s a real talking point and livens up the photographs.”
Take decent photographs
“It sounds obvious but people really do judge a book by its cover. I’m fortunate that as a cameraman I have good experience of what looks good in a picture. Some simple things to make your photos look good would be to make sure there’s lots of natural light so the pictures look really white and natural.
“Think about framing – don’t feel pressured to fit everything into one shot. Pick out the details and benefits of your property such as the view, quirky staircase, coffee machine or log burning stove. For us the tropical theme really sells the place in the photos.”
Rise of the rentrepreneur
- The typical UK Airbnb host earns around £2,000 per, rising to £3,500 in London
- Over four million people have stayed in a London Airbnb since 2008
- There are now 130,000 listed Airbnbs in the UK
- 93 per cent year-on-year growth in inbound guests (January 2017)
People buy people first
“Selling yourself is vital. From the way you write about yourselves on your listing, your profile photo, and first contact via email.
“People always have lots of questions, so we try to reply to customers within an hour and accommodate their wishes wherever possible. Just by being enthusiastic and helpful over emails can make the whole experience go smoothly when they arrive and help you get positive reviews.”
Reviews are vital
“Reviews are the lifeblood of your business. Because there’s a massive amount of trust involved – both ways – good reviews are what sets your business apart from the others on Airbnb. As mentioned, before your guests have even arrived they have a judgement based on your photos and email exchanges.
“To make sure the experience lives up to what you’ve promised, we find little touches such as a vase of fresh cut flowers, freshly baked cookies and some milk in the fridge and tea bags in the cupboard makes all the difference. Anything that costs us very little but just makes their experience easier, like sitting down for a cup of tea and a biscuit before they unpack.”
Attention to detail
“We always have a good selection of leaflets about local tourist attractions and events to help them decide where to visit. A copy of the local newspaper is a nice touch too, so they can get a feel for the area.
“On a more practical level, if you can give your guests two sets of keys this is really liberating so they can go exploring in smaller groups. Make sure there’s coat hangers in the wardrobes for guests to use and a couple of international adaptors are always handy. Lastly, when cleaning after departure check for stray hairs – they get everywhere.”
“Obviously, the amount you charge is a massive factor in attracting guests, as no one wants to feel they’re paying over the odds.
“Airbnb offers ‘smart pricing’, whereby their algorithm analyses other similar properties in the area and suggests how much you should be charging per night. We did this in the beginning as we had no idea what to charge and it really worked, we were booked out every weekend.“
Check your insurance policy
“Our existing home insurance wouldn’t cover us at all for anything once we told them we were going to let out the caravan through Airbnb, so we had to change insurers who then also gave us a separate liability insurance policy. Sounds dull but so worth it in the long run.”
Get an accountant
“We have got an accountant as we will be having different revenue streams so he will be sorting the tax out for us. It takes up quite a lot of time marketing and running the caravan and even keeping our books up to date, the added headache of trying to navigate HMRC just isn’t worth it. A good accountant will ultimately save you money over the long run.”
Doing your own accounts
For “rentrepreneurs” looking to shoulder the tax burden themselves, we asked Lee Murphy, founder of cloud bookkeeping software provider Pandle, what future hosts need to know about their responsibilities before they start an Airbnb business.
“Homeowners who rent their home or a room on Airbnb can take advantage of the rent-a-room scheme if it earns them less than £7,500 per year. This means no tax is payable on anything earned up to £7,500.
“For earnings above this, the full income and expenses should be recorded on a tax return, so make sure you keep receipts for anything you purchase for the room. The profit will then be taxed at the appropriate rate according to the taxpayer’s bracket. It’s important to note that if the earnings are shared (i.e. between spouses), then the allowance is halved for each spouse’s portion of the income.
“HMRC’s ‘Connect’ system can access income information from Airbnb and cross reference this against what you declare, so it’s important to register as soon as you are obliged to or you run the risk of a HMRC investigation which, along with being stressful, could lead to tax being payable along with penalties and interest charged.”
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