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What to look for in a rental management firm

If you’re a landlord or responsible person of a property, you might be thinking of gaining some additional income by renting out your property for holiday lets. Perhaps you don’t yet have a property to let, but you’re considering buying a property for investment. In either case, a short-term rental management service will handle the day-to-day handling of the property, from arranging bookings to guest interactions. The benefits of enlisting a professional property manager are numerous. Many, like Sevenstays, offer 24/7 assistance, for both you as owner and clients, property maintenance, cleaning, and maintaining a high booking-rate. In the long term, rental management services can lead to higher revenues from your property. Specialist agencies can secure a higher average occupancy rate, as well as higher average prices per night, compared to unmanaged properties. The Sevenstays team have compiled a short guide to achieving success in the short lets market, from choosing the right manager to deciding where to buy an investment property.

What to look for in a rental property management service

Experience

  • How much experience does the company have in the real estate market? Are they relatively new, or do they have a bank of satisfied clients? It’s wise to ask to speak with some of the agencies’ clients, to find out if they would recommend their services, and if they have encountered any problems.
  • Another consideration is speciality – does the company specialise in short term lets, or do they also manage long term rentals? The short lets market has its own intricacies, which dedicated short-lets services understand and can often better accommodate.
  • Does the agency have experience in your specific market, particularly your location? Rental markets vary greatly by geography, as seasonal demand, different events, and a different target audience looking for varied kinds of experience in their stay.

Local regulations

Is the service compliant with local regulations? In London, for example, residential property can only be used for short term lets for a maximum of 90 nights in one calendar year, and at least one of the persons providing the accommodation must pay Council Tax at that property. Look for agencies who verify their clients’ eligibility for holiday lets. By law, hosts will also need a Gas Safety Certificate, EPC and EICR to begin hosting, as well as safety equipment. Reputable services, such as Sevenstays’ account managers, will always check that hosts have these in place.

Fees

Look at the company’s fee structure. Do they charge a fixed-fee, or operate value based pricing? Either model can work, provided your property is successful and well-suited to the vacation rental market. At Sevenstays, we charge an agreed percentage of net earnings once your property is live. We’re confident that your rental returns from using our service will be worth the fee for using our services! There is also a one-off onboarding service fee of £250, which covers photography, cleaning, inspections, key setup, as well as health and safety checks. Your payment is sent by bank transfer once a month, and the amount refers to the previous month.

When hiring any short lets agency, look at what their fee includes, and whether there are additional charges (‘vacancy fees’) for when the property is empty.

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Ensuring my property is eligible for short lets

In assessing your property’s suitability for the short term rental market, Sevenstays have identified these factors:

Location

Successful short term rentals tend to be located in or close to city centres, key tourist attractions or areas of national beauty. Properties which are far out of the city centre can be less suitable, although this may vary depending on the city.

Interiors

Guests looking for short term lets want to see stylish, nicely furnished properties. This may mean re-decorating a property or investing in new furniture in order for it to secure bookings on Airbnb. Sevenstays can assist with cleaning, decorating and arranging your furnishings.

Architecture

Properties which are either modern and stylish, such as a penthouse apartment in Knightsbridge, or a quaint, historic building, attract guests. That said, location is perhaps the most important factor – simple properties in prime locations can command high prices throughout the year.

What is a furnished holiday let?

In the UK, some Airbnb properties will fall under the definition of a furnished holiday let (FHL). A property qualifies if it:

  • is available for letting on Airbnb for at least 210 days of the calendar year
  • contains a sufficient amount of furniture so as to be intended for everyday use
  • is in the UK or the European Economic Area
  • is rented to the general public for at least 105 days of the calendar year

Will I need to pay Business rates?

Whether you need to pay Income Tax or business rates will depend on whether or not you reside in the property yourself. If you do live in the property, then you will need to pay Income Tax. If you own the property but don’t reside there, or only live there for some part of the year, then you are liable for Business Rates. Any property on Airbnb can be liable for Business rates if:

  • In England, it is available for letting for 140 days or more per year.
  • In Wales, if the property is available to rent for 140 days per year and is let for 70 days,

In Scotland, if the property is available to let for 140 days or more per year, then it may be subject to Business rates – although you should check with a local assessor.

Unlock your earning potential

Are you curious about what possibilities hosting may hold for you? Ask SevenStays to calculate your earning potential.

Alternatively use our earnings calculator to get an estimate or read our FAQs to learn about how using an Airbnb management company could help you.

Request your calculation

Will I need to pay Council Tax?

If you are renting out an Airbnb property as a vacation let or as a vacation property, then you may not have to pay Council Tax. You are only liable to paying Council Tax if you pay Income Tax.

On the other hand, if you are paying Business Rates, then you won’t be liable to pay Council Tax.

VAT

You will need to pay VAT if your rental income is more than £85,000. If you need assistance to cover this, you can slightly increase your nightly rate, which is something your Sevenstays account manager can advise you on.

Is there any government assistance for holiday let hosts?

There are several tax reliefs and benefits available to UK FHL hosts. These are the Micro-Entrepreneurs allowance, and the Capital Gains Tax reliefs.

  • Micro-Entrepreneurs Allowance This is a scheme aimed at supporting small businesses. If you are letting out properties on platforms like Airbnb, the scheme enables you to deduct £1000 from your gross income, in order to calculate your taxable annual income.
  • Capital Gains Tax relief If your property is classified as a FHL, you can claim Capital Gains Tax relief for traders, Business Asset Rollover Relief. In short, this means that if you have a property qualifying as a FHL, and you own an investment property which you don’t live in but want to rent, you can be eligible for a reduction in Capital Gains tax on the sale of your first property when you sell one FHL property, and purchase another under the roll-over scheme.