[Closed] Air BnB holiday letting advice

I got a letting valuation no problem (Scotland, not Airbnb)

From a letting agent you subsequently went on to use, or a random one?

Isn't the issue here she's not looking to let* it as such, it's to be run as a bed and breakfast essentially, not a letting. So it's a commercial rather than buy to let mortgage she should be looking at? (so will need a business plan, costings, p&l projections etc.)

Iana mortgagist.

*letting being a long term thing and involve things like tenancy agreements, deposit schemes, legal frameworks etc. and likely would be the sort of thing that a letting agent would give a valuation on as part of their let us take 50%pcm pitch.

She’s tried a few agents and it seems they won’t provide

The question I'd have here is "why not?"

If she's taking on a property to run as a BnB, the mortgage company won't offer a mortgage without evidence of ability to make money / repay and all the agents want nothing to do with it, does that not ring alarm bells that it's perhaps not a wise purchase? Or is the question simply crystal ball territory? (I don't know the answer to this, it could well be fine but it'd make me nervous.)

Can she afford the repayments if she doesn't get any customers? If yes then does it matter? Can she buy it as a dwelling and then change status once the mortgage is in place? (Again, I've no idea, just tossing ideas around.)

Remortgage her own house to release the money for the holiday let? You can still offset the interest of the mortgage against the income of the Airbnb as long as you can provably show that that's what the remortage release of capital was for. This way you can also access domestic mortgage rates rather than more expensive buy-to-holiday-let mortgages (they are a thing and I assume what she is applying for).

We nearly went down this route.

Otherwise, try and get hold of Airbnb - she is far from alone in doing this so there must be work arounds.

An aside - sanity check her choice of airbnb. It might well be that is it the type of property with the type of market that it makes most sense. We nearly went that way but in the end we went for one of the big agencies (Sykes). Whilst their percentages might look scary in comparison, once you crunch the numbers for the right type of property it can make more sense.

Finally - double check her intensions to make it available for letting - work with where in the country it is going to be. The zero rate relief from business rates is being tightened up in parts of the country (this is a good thing imo) and you'll need to provably show a number of days available for rent and a number of days actually renting to be able to claim it.

The property is our parents house, she's taking on a small BTL mortgage to buy me out. She wants to let it out occasionally (hence the air BnB route) in order tide the mortgage over until she's in such a position to pay it off completely and ultimately move in full time.

She has a mortgage already on her current property, selling that and moving isn't currently an option. Because o this is a second property it has to be a BTL mortgage, or so we've been told!

It isn’t buy to let though. That assumes a long term tenant and a predictable income. This is buy to holiday let, which is a completely different proposal for a lender.

Ignoring the mortgage type for a moment, did your sister tell the letting agents that she was going to AirBnB it? If so, aren't letting agents and AirBnB competing with one another to a degree? Why would a letting agent give your sister the paperwork she needs to market something via a competitor?

Maybe a little white lie would help - get a few of them round to quote on expected income on the assumption they let it and manage it. No doubt she'd get some pretty tasty valuations then!

has to be a BTL mortgage, or so we’ve been told

https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/holiday-let-mortgage/

From that website:-
If you are going to need to borrow to buy your holiday home, then you will need a specialist mortgage.

Lenders want to know the property could be easily sold, so they won’t usually give you a mortgage on a holiday park home or somewhere that is limited to just being a holiday home.

As someone who owns AirBnB properties it is difficult to get most lenders to lend against them. For most it will technically be a breach of the T&C’s of the mortgage and as others have said letting companies wont tell you because its not a let. The other things to be wary of and have in place are the following.

If its a flat then you need to either make sure you are operating within the terms of the lease or have the lease holders permission as it might be outside the scope of their building insurance

A good team who will manage the bookings ie do the checks on the guests (is the guest using their real name etc, you don’t want it to be a party venue or worse), organise the cleaners and the laundry, how guests access the property (key boxes) and check that it is in good condition when they leave. Who will answer the phone at 2am when the guest decides there is a problem and finally insurance. We don’t bother with content insurance because its going to be really hard to make a claim when you give a key to the guest to let themselves in. You should have liability insurance as you are effectively operating as a hotel.

How many AirBnB operators actually do all of these is probably open to debate. It depends on how hands on you want to be and what level of risk you are comfortable with

Echoing the above - why would a letting agent provide a B and B projection? Sounds like it’s a business plan that’s required.

+1

We looked at AirBnB'ing our old BTL - it needed a commercial mortgage. Along with a lot more planning for income and lack of income, lower LTV etc. It also completely changed the insurance, and I was duty bound to tell the other flat owners in the block under our lease terms.

I would also say, having known a few folk who thought AirBnB was an easy way to more income than BtL - it seems short term rentals a brutal physically on the property. Much more cleaning than expected. Endless issues from crockery being broken, to people meddling with boiler, to treating owner as a concierge service for more towels etc. And then they just leave negative reviews. It's not an easy way to make money.

Could you just rent it long term?

I agree Matt. We actually switched ours to standard BTL as it was more profitable and 1% of the hassle

I keep looking at air b and b type rentals as the rates seem v attractive v long term let. However, as ever, the devil's in the detail. I suppose if you live nearby and do everything yourself you could do well with the right house, however I don't, and I think guests expect hotel type levels of service as that's what they are paying.

Even with long term let's you have to choose your tenants carefully, remote air b and b management must be a nightmare.

It's nice your sister has taken on your parents house, i plan similar.

THe devil is in the detail. Airbnb will charge you a % booking fee. A management company to do the work for you another 20%+VAT then there are the cleaning and laundry costs after each guest. Then all your costs, utilities, council tax, etc. They work very well if they are holiday lets where your guests stay for a week but much shorter term bookings are much less profitable hence why the headline rates per night are up there with hotels