More overseas property owners are using Airbnb and similar online services alongside traditional agencies to generate vital rental income on their properties.
New life in other countries
Airbnb – which started 10 years ago – has also helped those looking to move abroad by making it easier to find accommodation and sample life in other countries.
Short-term lets have taken off since the advent of convenient online booking through Airbnb
, which was established in August 2008.
Fresh options for property owners and travellers
It has since been joined by VRBO
and other specialist online service providers, offering income for property owners around the world and fresh options for travellers.
Ideal option to maximise rental income
For expats spending some time and owning real estate in different countries, it’s an ideal option to maximise income, offset expenses and still keep use their home when they want to.
Airbnb has 5 million homes around the world
Since Airbnb was founded as Airbedandbreakfast.com in August 2008, it now offers more than five million homes around the world. More than 300 million guests arrive each week in more than 81,000 cities and 191 countries.
Paris and London among top target cities
The top markets by active listings are Paris, London, New York, Rio de Janeiro, Los Angeles, Barcelona, Rome, Copenhagen, Sydney, and Amsterdam.
Not as divided as we think
Airbnb founders, Brian Chesky, Joe Gebbia and Nathan Blecharczyk, say, “Thinking back to those days in August 2008, people thought the idea of Airbnb was crazy. Strangers would never trust each other. We live in an era where there’s a lot of division online and in the world, but Airbnb is actually proving we’re not as divided as we think we are. It has taught us that we’re more similar than we are different. People are 99 percent the same and people are fundamentally good, statistically. Otherwise, this concept wouldn’t work.”
Free space for people in need
Airbnb now offers an Open Homes
programme, where homeowners offer extra space for free to people in need of temporary housing.
The idea came from a host who wanted to offer her spare bedrooms to people displaced by Hurricane Sandy free of charge.
Since 2012, more than 11,000 people from 52 countries have helped thousands of displaced individuals, first responders and refugees seeking transitional shelter.
US and France top inbound and outbound guests
The top 10 destinations of inbound guests for Airbnb as a whole are the United States, France, Italy, Spain, the United Kingdom, Japan, Canada, Australia, Germany, and Portugal.
The top 10 sources of outbound guests are the United States
, the United Kingdom
, China, Spain
, and the Netherlands.
UK hosts earn £3,000 a year on average
The average earnings for UK Airbnb hosts is around £3,000 from a typical 36 nights a year, according to data from airbnbcitizen.com
Airbnb adds £3.46b to UK economy
Between July 2016 and July 2017, hosts and guests using Airbnb contributed an estimated £3.46 billion to the UK’s economy, with 5.9 million inbound guests travelling on the platform over this period, says the Airbnb UK Insights
5.9m UK guests welcomed in last year
Activity on Airbnb is spread across the UK, with residents from close to 2,500 villages, towns and cities – a total of 168,000 listings – welcoming 5.9 million guests in the last year.
Flexibility and affordability more important
The report says, “Flexibility, affordability and local connections are becoming more and more important, and this is having a profound economic impact on the UK. Whether it’s to earn extra income, impart insider knowledge or simply meet new friends, people are increasingly recognising the benefits of sharing their home. With that comes a new income for households, increased spending in local communities and a more affordable way for visitors to travel in the UK.
“Between July 2016 and July 2017, hosts and guests using Airbnb contributed an estimated £3.46 billion to the UK’s economy, with 5.9 million inbound guests travelling on the platform over this period. Travel on Airbnb has helped boost local tourism, while encouraging exploration of familiar and lesser-known destinations across the UK.”
55% rent an entire home
More than half (55%) rent out their entire home through Airbnb, 44% rent a private room and 1% a shared room.
Two in three UK hosts are women
Hosts on Airbnb range from students to retirees, however the average age of a host in the UK is 43, with women hosting more than men (62% to 38%).
Using a property manager
While some hosts on Airbnb manage their listings, for additional convenience, some hosts choose to list their home via a property manager. This company/person will act as a host to the guests, handling communication and check in, and ensuring that they are looked after throughout their stay
Hotels and B&Bs
Boutique hotels and traditional bed and breakfasts are also using Airbnb to increase the visibility of their space and welcome more guests.
Living ‘like a local’
Looking at the guest profile, 74% use Airbnb to visit the UK for holiday or leisure and 79% choose Airbnb so they can “live like a local”.
Three in four UK guests from Europe
Indeed, domestic travel is a growing trend on Airbnb, and the ‘staycation’ is increasingly popular. While 76% of guests using Airbnb to travel in the UK are from Europe, 53% of guests start their trip in the UK
. There are 6% from Germany and 4% from France
. There are 13% from North America
, 5% from Asia, 4% from Australia
and 1% from Latin America and Africa and the Middle East.
US hosts earn $20,000 average profit
Income in the United States is around five times higher, with hosts in February 2018 earning average annual profit of $20,619 on a two-bedroom apartment or house in the 15 cities examined by the SmartAsset.com financial advice website. On average, 81% of average monthly rent can be earned through Airbnb bookings.
For overseas property owners looking to rent out their property, Airbnb offers several extra services to help them ensure the process is smooth both for themselves and their clients.
Airbnb host guarantee
Airbnb helps homeowners by offering up to £600,000 in the UK or a $1million host guarantee in the United States
over accidental damage and provides host protection insurance against liability claims.
Special mortgage for hosts
In the United States, there is even a special mortgage
available to Airbnb hosts via Government-backed mortgage group Fannie Mae that allows Airbnb hosts to use their rental income as part of a lender’s approval, so increasing their borrowing capacity.
Legal and financial advice
If property owners are thinking of short-term rental through Airbnb, another platform or agency, check out the local regulations and talk to an independent legal and financial advisor
about the obligations and implications.
Crackdown on short-term vacation home rentals
It's easy to see the rise in popularity in property rentals and think that it is quick and easy to generate revenue from short-term rentals, but it may not be as simple as it seems.
Many destinations around the world are cracking down on vacation rentals, particularly those on short-term platforms like Airbnb, and are strengthening local legislation and requirements.
For instance, Madrid
in Spain, is set to introduce new plans to restrict the number of homes that can be legally rented, which is predicted to decimate the short-term rental market. The rules, aimed at “preserving the residential use of buildings”, say apartment or home rentals must be restricted to 90 days or less a year. Apartment building used for short-term rentals would also have to have the same licence as hotels. Those in Madrid’s central district need a separate entrance for rental clients as opposed to permanent residents.
cities including Valencia, Barcelona, Malaga and Seville are either consider or have introduced similar legislation on short-term tourism rentals.
Cape Town compliance
In Cape Town, South Africa, letting flats out in the city-centre is illegal without the proper approval processes in place, warns search agency, Coastal Property Group.
The Municipal Planning By-law (MPBL) regulates holiday accommodation within the city. City of Cape Town mayor committee member, Brett Herron says any short-term holiday letting from a flat or a block of flats – irrespective of the platform including Airbnb or similar – must ensure that this is compliant with Body Corporate rules. This includes making sure the property is appropriately zoned, and must apply to the City for approval.
"Applications must be made to the City’s Development Management Department. Any property owner wishing to make an application is advised to approach one of the City’s district planning offices or to access the Planning Portal on the City of Cape Town website where the requirements can be obtained," he says.
Consult a specialist
Short-term letting or transient accommodation is a complicated matter and potential applicants should request a pre-application consultation session with a land use planner, he advises.
General residential zoned properties and single residential zoned properties do not have the same restrictions.
"Most general residential zoned properties in the city have only a dwelling house (a house used as a residence rather than for business) and in some cases a second dwelling. The City’s Development Management Scheme permits B&Bs to be run from such dwellings without any permission subject to compliance with conditions as specified in the scheme."
Owners of general residential zoned properties can also run a guest house from a dwelling or second dwelling which seems to be a popular approach.
A guest house would, however, require the approval of the City if the property is zoned for single residential purposes. Bed-and-breakfast and guesthouses can only operate from a dwelling house or second dwelling and not from a block of flats.
Developer Buy To Let services
Some developers around the world will offer clients legal and financial services themselves to buy-to-let/build-to-rent property owners, either in-house, or through an associate. Again, it is worth checking the credentials of the providers to ensure they are professional, reputable and have a reliable track record.
Best returns and least risk
Vacation home owners considering both long and short-term rentals should also take professional advice from a financial expert. This includes working out whether short-term or long-term rental options will bring the best returns and least risk.
Property owners will also need to factor in their tax obligations as well as any legitimate expense claims they can make to legally offset their bill. Again, foreign owners should select someone with knowledge of the obligations in the locality where they own property and where they live.
It is also important for foreign property owners to ensure they maximise their income by protecting their international payments and finding good money transfer rates, says David Johnson, founding director of foreign exchange specialist, Halo Financial. “The right guidance can help you save thousands of Pounds on your currency transaction, which can make all the difference when buying a rental property abroad. You can also save on rental income exchanges and other ongoing foreign currency needs.”
Free tools and services
Halo Financial offers a number of free money transfer tools and services
on offer for single transactions as well as regular currency exchange requirements
. Clients work with a dedicated currency specialist to build a strategy of tailored currency tools that allow them to budget effectively, protect themselves from the risk of currency losses, and find opportunities to make the most of their money. They allow clients to buy or sell when the rate suits, protect against adverse currency movements and run automated orders to ensure they make the most of rate increases.
UK landlord numbers falling
Following a series of legislative changes and tax rises on buy-to-let property in Britain, the proportion of homes let by overseas landlords has more than halved from 13% in 2010 to a record low of 6% in the first half of 2018.
London bucks the trend
However, the number of homes in London
owned by a foreign landlord has bucked the trend and nearly doubled from 5% in the second half of 2017 to 12% in the first half of 2018, according to sector specialist Hamptons International.
The average cost of a new let in Great Britain rose to £964 per month in July 2018, up 0.2% year-on-year.
Europeans and Australasians top UK foreign landlords
Nearly half of international landlords are based in Western Europe (44%). Landlords from Australasia (16%), North America (14%) and Asia (12%) make up the next biggest groups.
Middle Eastern landlords account for nearly one in ten (9%) homes let by international landlords in Great Britain. But in London, 30% of international landlords are based in Western Europe followed by one in five (20%) from Asia.
Highest rent growth in Wales
Wales saw the highest rental growth with rents up 4.9% year-on-year, followed by the Midlands (2.4%) and the South West and North both recording a 0.9% rise. Meanwhile average rents in London fell for the second consecutive month, down 1.6% year-on-year.
Sterling depreciation provides ‘discount’
Aneisha Beveridge, Analyst at Hamptons International, says, “The proportion of homes let by an overseas based investor has halved in the last eight years. Higher stamp duty and annual tax on enveloped dwellings combined with a steady increase in foreign investors’ tax bills has led to a decline in foreign investment in buy-to-let. Overseas investors also saw the removal of capital gains tax exemptions in 2015.
“However over the last year, London has bucked the trend with a pickup in international landlords. Sterling’s depreciation, effectively offering international buyers a discount, combined with a softening London market, has helped offset the additional higher costs of owning a buy-to-let property in the capital for foreign investors.
“Rental growth slowed to 0.2% across Great Britain in July. Falls in London were offset by higher growth in the rest of the country. Inner London experienced the greatest fall, with rents decreasing for the third consecutive month.”
Cost-effective home exchange
Rather than renting a house, some budget-conscious holidaymakers and travellers are turning to home exchange as cost-effective alternative for low-cost holidays, or the opportunity for those looking to explore emigration options in new countries is home exchanges.
But hosts are always looking for a way of making the booking process easier, safer and more transparent for both hosts and guests. Now, the new Service Plus option from sector specialist GuesttoGuest
claims to do just that. Founded in 2011, GuesttoGuest
is a peer-to-peer home exchange company, with 409,000 homes in 187 countries.
For €10 a night, Service Plus provides additional identity verification, improved cancellation support, and 24/7 worldwide assistance in case of emergency no matter the destination, home size, or number of travellers.
“Service Plus is an advantageous offering for both guests and hosts. Guests no longer need to worry about unforeseen circumstances during the exchange, including last minute cancellation.”
With Service Plus, GuesttoGuest members are always guaranteed an accommodation, says the provider. Hosts are also covered up to €500,000 in case of accident or damage to their home caused by the guest.
Charles-Edouard Girard, President of GuesttoGuest says, “As the home exchange community expands and travellers reach ever further destinations, our priority is to make the booking process as easy and intuitive as possible. We increased identity verifications and added a level of booking confidence never before seen and unparalleled to anything in the home exchange market. Our promise is to always provide easy booking, peace of mind, and memorable vacations.”
You can also keep up with the latest news on property abroad and how it affects the currency markets in our informative news