In his new Money Coach column, TV property expert Phil Spencer delves into the key challenges that buyers and sellers face in the housing market. This week, he takes a look at how you can secure the lowest price possible for your dream home.
Work should be the last thing on your mind when you’re on holiday.
But while you unplug and recharge, your home could be hard at work – earning money that you can put towards your travel costs.
There are a few hoops to jump through, but if you’re comfortable with the idea of paying guests enjoying your home while you’re away, there are several ways to temporarily transform your home from a cost into a cash-generating asset.
Which option is best for you will depend on how long you’re away for, and how much work you’re willing to put in to keep your home guest-ready.
Self-managed short lets
If you’re away for anything from a few days to a few months, an Airbnb-style short let is an obvious choice.
It’s also a hugely popular one; last year 101 million guest nights were spent in short let properties in the UK, with over 14 million in August alone.
Airbnb and Vrbo are the best known, but there are lots of platforms that allow you to list your home online. Once you’ve uploaded a description and photos of your property, and passed a few identity checks, your listing can go live in as little as 24 hours.
Guest bookings are largely automated and easy to organise, which is one reason why platforms like Airbnb typically charge you a 15.5 per cent commission.
When setting the nightly rate, research the listings of similar properties nearby to see how much they’re charging and how their facilities compare to yours.
Don’t underestimate renters’ expectations! It’s a competitive market, so fresh bedding and towels, tidy rooms and clean kitchenware are all must-haves.
If you’re managing lets yourself, or asking family or friends to do it while you’re away, have a clear plan on how renters will collect the key and return it at the end of their stay, and how you’ll handle changeovers between guests.
Alternatively, there are specialist short let management companies who for a fee will handle everything for you, from answering guest queries to cleaning.
You’ll probably want to give your home a thorough clean before leaving, and you should always lock away any valuables or personal information.
Managed short lets
If you’re going away for longer, or would just rather leave the legwork to someone else, many high street letting agencies handle short lets as well as conventional tenancies.
Alternatively, big cities and tourist hotspots often have specialist holiday letting companies you can use.
Companies like this know the local market well and have a team to manage changeovers, but of course their service comes at a cost; 20 per cent of your rental income is typical for a short let. Some insist on a minimum period too, so they may not take on your home for just a few weeks.
Short-letting is fairly straightforward and avoids the stringent safety checks needed in long-term rental properties. However, there are a few rules you should never ignore.
Always let your insurer know about your short let plans; failing to do so might mean they wouldn’t pay out for an incident that happened while you’re away.
Depending on your mortgage conditions, you may have to let your lender know as well. If you own a leasehold flat, check the lease to see if there are restrictions on short lets.
Finally if you’re a renter, always inform your landlord and get their agreement that you can sublet the property.
There may also be local rules about short lets, so check your council’s website. For example, in London you can only short let a property for a maximum of 90 nights per calendar year. In Scotland, short let hosts must have a licence, which may make it too bureaucratic or expensive for a one-off let.
Finally, don’t forget tax. The money you make from short lets is treated as property income by HMRC, though you can make up to £1000 a year tax free. Platforms like Airbnb will automatically share details of what you’ve earned with the tax authorities, but you should declare it on your tax return as well.
Don’t be deterred by the red tape. There are around 420,000 UK homes listed on Airbnb alone, so it’s clearly worthwhile both for owners as well as those looking for a place to stay.
Home swaps
An alternative to letting out your home for money is to find an owner with a property you like in another location, and swap with them for your holiday.
Swapping homes gives you free holiday accommodation and an insight into what life is like elsewhere. Plus, you may get the opportunity to stay in a really unusual property!
Trust is important, so it’s best to use one of the established swapping platforms like HomeExchange, Guardian Home Exchange, Homelink or Home Base Holidays.
You may have to subscribe, but once you’re a member listing your property is easy and correspondence with potential swappers is typically by email and phone.
As with short lets, you’ll have to arrange key transfer and should inform your insurer, mortgage lender and neighbours who might otherwise be suspicious of strangers.
Home swaps have been popular for decades and can be great fun, even if you don’t find love like Kate Winslet and Cameron Diaz in the home swap romcom The Holiday.
Phil Spencer is a property expert and co-presenter of Channel 4 show “Location, Location, Location”. He is also the founder of Move iQ
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