A rental sector management firm is asking whether possible upcoming tax probes by HMRC may spell the end of the short-let landlord.
As we reported last week, Airbnb has passed details of financial transactions of 225,000 people who let out homes and rooms through its site to HM Revenue & Customs.
Now David Alexander, joint chief executive officer of PropTech rental platform apropos, wonders whether this could potentially result in substantial bills for all landlords but particularly those who operated multiple properties through the site.
“Since the start of pandemic we have had hundreds of former Airbnb property owners approach us about shifting from short to long term letting. They correctly predicted that nobody would be holidaying or travelling and therefore their incomes would dry up over the course of this year” explains Alexander.
“This investigation by HMRC into the income earned by these property owners between 2017-2018 and 2018-2019 means that many more landlords will feel that the short-term letting market is not for them. Indeed, there are some companies which had large numbers of properties hired through Airbnb and other sites which may now face considerable tax liabilities in the coming months” he adds.
Alexander says it’s easy to see the appeal of short-lets in financial terms, but he fears many landlords may have entered this market naively and without fully understanding the implications.
“There are higher rents for short term lets but also greater obligations and costs in terms of managing property. Greater cleaning and maintenance costs, higher insurance premiums, and the expectation that more damage is likely to be caused by a short-term tenant than someone who wants to establish a home in your property. All of these factors alongside potential high tax bills will have put many landlords off remaining in the market” he says.
Apropos says that with the pandemic continuing for the foreseeable future it anticipates that a short-let-to-longer-let trend will become more pronounced in the coming months as more property owners see their incomes shrink.
“This, coupled with potential tax demands before Christmas, is likely to see further large tranches of property released on to the long-term letting market as owners seek to recover some of their losses from the first part of the year” Alexander concludes.