Irish Airbnb hosts earning €3,500 a year

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Airbnb Rentals:

The Irish Times reports that around one-third of Irish Airbnb hosts were renting out second houses to the 1.2 million overseas guests visiting Ireland last year.

The practice, which has been common in England, is controversial as it takes housing stock from the private rental sector (PRS), especially in areas of high demand such as London and the south east.

In 2016, landlords letting through Airbnb earned almost doubled the return they could have received for the average long-term letting in Dublin, many earning up to €3,500 a year.

Airbnb has come in for criticism across the world for not “weeding out” those landlords who are renting their properties through the website, and other websites such as Gumtree, for short periods, without the necessary planning permission, and in some case in breach of their leases.

In its first Irish “insights” report*, Airbnb says there were 8,500 active listings for spare rooms and entire homes in Dublin, with a typical Irish host earning €3,500 a year.

Airbnb said that the number of guests coming to Ireland increased by 63 per cent in the past year, generating €506 million in “economic activity”. There are now said to be at least 400 listings in every region in Ireland. Around 70 per cent of hosts rent their primary home or rooms in their primary home through Airbnb, leaving the other 30% that letting second homes.

The report says that that 85 per cent of guests use its service as they “want to live like a local”. Airbnb claims that their service was used by 676,000 Irish people last year, an increase of 98 per cent. About 20 per cent of those used the service in Ireland.

Of the 22,800 listings nationwide, 51 per cent of those were for an entire home and 48 per cent for a private room. About 1 per cent of listings were for “shared rooms”. Airbnb says that the average number of nights rented out a year by a host was 37.

Statistics quoted by the Irish times, published in December by Airdna, a data analytics company, claims that almost 5,000 whole properties were being let across the republic for up to €800 a night. Trinity College Dublin are said to have earned €172,000 through short-term lettings in one year, and at least a dozen landlords were identified as earning more than €100,000 a year renting out homes through the site.

The Irish Department of Housing is using Airbnb as a focus for regulatory proposals to put a limit on the number of nights for short-term letting of flats, to 60 nights a year.

London has applied a 90-days per year limit to properties that are let short-term since 2016. In Amsterdam that is 60-days per year, and homeowners in Berlin have been banned completely from letting out whole properties to tourists, in order to keep standard let rents affordable.

*Here is the equivalent report for the UK: Airbnb UK Insights Report: Bringing You Home Sharing Region by Region

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Irish Airbnb hosts earning €3,500 a year | LandlordZONE.

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Holiday Let or Buy to Let?

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After many years of letting to ‘regular’ tenants, I’m now thinking about dabbling with holiday letting. I’ve just agreed to buy a modern mid-terrace house in a seaside town in Cornwall, and my own house is also by the sea

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Long lost partner and change of title deeds?

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This is a strange one, which I hope someone might have had dealings with in the past, so here goes.

My wife rents a property at the moment, which she purchased back in the early 90’s with her partner at the time.

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The Story of “Landlording” – a brief History

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Landlord Laws:

• The pre History of landlording is perhaps lost in the mists of time, but much of our modern property law – and throughout the English speaking world – stems from 1,000 years of English legal history.
• Modern property law involves two main legal elements: common law or “judge-made” law, and statutory law or Acts of Parliament. Years of case law and numerous acts make the whole area quite complex.
• Residential Tenancies in England and Wales are currently governed by the Housing Act 1988 as amended 1996 and 2004, and various amendments on other Acts.
• Business Tenancies in England and Wales are covered in the main by Common Law Contract and the Landlord and Tenant Act 1954 Part II, unless both parties have agreed before the lease to contract out of the Act.

In Brief

Property law in England and Wales has its roots in antiquity.

Statutory rules always over-ride all other laws. Despite many preferring the slow and incremental process of common law decisions, judge by judge, case by case, seemingly endless statements and new rules increasingly pour out of Parliament. Under the English legal system tenancy laws are a curious mixture of the law of contract, property laws, and statutory rules.

Renting (or letting) is based on a contractual arrangement whereby a tenant occupies and gains a “legal interest in land”, exclusively for a specified period of time, usually in return for the payment of rent.

Before WW1 most people in Britain rented their homes, farms and business property. This situation changed dramatically for housing over the course of the 20th century, until at the lowest point only around 7% of the population rented their homes in 1991.

Whilst business lettings remained largely unaffected, housing was strongly influenced by social legislation (life-time security of tenure and rent controls) and public sector housing  provision.

Total security of tenure for residential tenants and rent controls in England and Wales, and consequently very low returns, made letting residential property unpopular until following the introduction of the Assured Shorthold Tenancy (AST) by Margaret Thatcher’s government in 1988.

This change was brought about by a re-balancing of the rights between landlord and tenant in the 1988 and 1996 Housing Acts, which removed rent control, allowed private landlords to let at market rents, and gave landlords a mechanism to re-possess if they got a bad tenant.

Investment returns became economically viable again, which encouraged home owners, small landlords and investors to enter the lettings market – the buy-to-let boom began.

These legislative changes in England and Wales tended to coincided with shifts in population demographics and a modern lifestyle begun to favour renting for its flexibility.

The 10-year property boom which preceded the credit crunch of 2007-8 and after resulted in unprecedented growth in property investment around the world. Many ordinary citizens, most of whom would never have contemplated the personal title of “Landlord”, as a result of the Buy-to-Let boom, are now blessed or saddled, which ever way you care to look at it, for good or ill, with this ancient mantle.

One has to remember that in many communist countries, anyone with the title of landlord around their neck, also ended up with a rope around it as wall!

How “Landlording” Started

Property matters in England (and indeed in much of the English speaking world) stem from well over 1000 years of English and European history.

The manorial system (seignorialism), begun under the Roman Empire, became common from around the 5th century onwards in England and much of Europe. Peasants became bound to the land and dependent on their landlords for protection and a basic form of justice.

Later, feudalism, which lasted in Europe until around the 15th century, became widespread. This was a contractual system of military and political relationships existing among the nobility of Western Europe. It was a system whereby fiefs (land and labour) were granted in return for political and military services. This was based on a form of contract sealed by oaths and fealty (fidelity).

Lords provided knights for their king by dividing their estates into smaller parcels known as “knights’ fees” which they allocated to tenants, able to serve as knights. These knights in their turn would grant plots of land to their own tenants (villeins) in return for their services. In effect a feudal pyramid developed, somewhat reflected in the modern landlord-tenant and sub-tenant relationships.

Lords had few if any rights from their king, and likewise knights (tenants) had few if any rights from their Lords. The system was open to extortion and abuse if not benevolently applied and not until the signing of Magna Carta in 1215 did England see any statutory rules on human and property rights.

The statute of Quia Emptores (1290) was a major turning point which allowed the purchase and sale of land, removing the importance of the personal relationship between lord and tenant as being basic to land tenure. The legal principles of this statute still regulate the transfer of land in England and Wales to this day.

Land Tenure

Today, ultimately, all land in England and Wales is owned by the state, land being merely “held” on tenure (freehold) reverting back to the state in the absence of rightful heirs. To all intents and purposes a freeholder (fee simple absolute in possession) is the owner of property for life.

The Law of Property Act 1925 defines these ancient legal concepts: “fee” as heritability of the tenancy and “simple” meaning no restrictions as to inheritance, “absolute” being everlasting (except where the freeholder dies without heir) and “in possession” either personal occupation or the right to take rents or profits.

The Law of Landlord & Tenant deals with leases, which are contractual agreements permitting tenants (lessees) to occupy land and premises exclusively for a period of time in return for regular rent payments. On expiry of the lease, at common law, the freeholder (lessor or landlord) is entitled to resume possession.

Modern Property Law

Landlord and Tenant law now has a dual nature and is rather complex. On the one hand it is based on common law contract or “judge-made” law which has evolved over the centuries.

However, Parliament modifies and over-rides the common law and equitable principles through the passing of statutory codes and regulations, The Law of Property Act and the Rent and Housing Acts being examples. Increasingly, European Law, Acts of Parliament, codes of conduct (consumer codes), and statutory or non-statutory rules and regulations of many kinds are all affecting the business of letting property.

Modern property laws and legal codes differ throughout the Western World, and indeed, although mostly the basic legal principles are the same, differences increasingly exist throughout the four countries in Britain following devolution of powers, and in the United States, Canada, Australia, New Zealand and South Africa etc, and in some cases such as Scotland and much of Europe they are based on a different (Roman) legal system.

The whole process is slowly changing and evolving as new legislation comes along and courts set new precedents as they interpret both common law principles and statutes vis-à-vis individual cases.

Lawyers and property professionals keep up-to-date with the interpretation of the law by studying recent case decisions. Every now and then a landmark case sets a precedent which becomes a guiding principle, until such time as it may be further challenged.

A business tenancy is a contractual arrangement between landlord and tenant governed by common law for the period of the lease term. The statutory landlord and tenant legislation comes in to play when disputes arise at the end of business tenancies regarding security of tenure and grounds for possession.

Business tenancies in England and Wales are covered in the main by the Landlord and Tenant Act 1954 Part II. This Act gives business tenants a degree of security of tenure at the end of the lease term (a right to renew the lease on similar terms), unless both parties have agreed beforehand to contract out of the 1954 Act.

In the case of residential tenancies, they are governed by statutory (parliament made) rules and regulations from day one of the tenancy – the Housing and Landlord and Tenant Acts.  Whilst the residential agreement is still a contractual relationship (agreed rules) between two private parties, in law much of the residential tenant/landlord relationship in England and Wales is governed by Acts of Parliament.

Private Landlords

Up until about 1914 approximately 90 per cent of all housing in Britain was privately rented. This compares to only about 7 to 10 per cent at the end of the century, though from a low point of about 7 per cent in 1991 there had been a steady increase over the last nearly 30 years. It is now predicted that the privately rented sector will reach 25 per cent of the total housing market by 2025.

The trend of decline in private renting throughout most of the 20th century can be put down largely to social policy trends and anti-landlord sentiment, legislation designed to switch the balance of power away from the landlord in favour of the tenant.

Examples of notoriously harsh absentee landlords of old and had entered the public psyche through writers such as Dickens and Trollope, and the process was exacerbated in the 1960s by the notoriety and scandals of Peter Rachman et al.

“Rachmanism” entered the English language as a term used to describe the activities of ruthless slum landlords, and their exploitation of hapless tenants. Ironically, Rachmanism grew up as a result of legislation introduced to do the exact opposite – protect vulnerable tenants. A small minority of landlords gained advantage by circumventing these legislative controls.

The first Rent Act was passed during the First World War (1915) as a “temporary” means of preventing landlords from exploiting the increased wages of munitions workers. This was the start of a whole series of legislative acts designed to protect tenants but which in practice mitigated against the provision of rental accommodation and hurt the very people it was designed to protect.

Security of Tenure

Rent controls and total security of tenure in England and Wales (Landlords unable charge market rents or terminate tenancies, which even passed on to successive generations) swung the balance so much the other way that over the century the decline in privately rented residential property was quite dramatic.

In effect, letting residential property throughout much of the 20th century became uneconomic for the private landlord. Too many landlords had their “figures burnt” through immoveable and uneconomic tenants, so the national stock of private residential housing deteriorated and virtually dried up.

Over the years several legislative attempts at relaxing controls were made to stimulate supply, but none was effective until the 1988 Housing Act brought in the Assured Shorthold Tenancy. This was a turning point enabling landlords to let at market rents with a guarantee of getting their properties back if need be.

The Shorthold Tenancy

The Shorthold Tenancy started to stimulate supply again but it was a slow process particularly, as the legislation did not apply retrospectively, i.e., not to “Rent Act” tenancies created before 15 January 1989.

Ten years ago less than 70% of UK housing stock was in owner occupation and falling. About 19% was in social housing (local council and housing association) ownership, the remaining 10/11% in the hands of private landlords.

Since then in total numbers both owner occupation and private renting has risen steadily with increasing affluence and the influence of the Thatcher years policies of selling off council properties. This process has continued to the point where housing associations are becoming the main owners of social housing, private renting has overtaken social housing and as a proportion, home ownership is now in decline, approaching 60 per cent.

The increasing wealth of UK professional and many working families, with inherited family property and increasing investment funds, has encouraged the move into rental property as an investment alternative.

This, coupled with the Assured Shorthold Tenancy and the Buy-to-Let mortgage, has resulted in a steady rise in the supply of privately owned rented accommodation. We have a long way to go to reach the levels of the European market, but there is now a definite move in this direction.

Demand for Renting

The other side if the coin is the demand for rented housing. Demand has begun to increase encouraging more supply. The rapidly rising property prices in the hot spots, particularly London and the south east, has resulted in first timer buyers being squeezed out of some areas.

For the tenant, renting has become a convenient alternative to buying and for some it has become the only option:

• Job mobility, job insecurity and short-term work contracts have meant that many are wary about becoming locked-in to owning a property.
• Co-habitation prior to marriage – again means that couples are often reluctant to become looked-in to a property and a large mortgage, which may be difficult to unravel if there is a split.
• Higher divorce rates and an ageing population – with people in general living longer, this has increased demand for housing and particularly single accommodation.
• In many cases high property prices and high purchase deposits after the credit crunch have priced out first time buyers and for many renting has become the only option.

The Future of  “Landlording” in the UK

For economic prosperity the country needs a mobile and flexible workforce and the fast-changing modern economy of Britain needs more high quality private rented accommodation.

All the signs are that the increasing demand for rented residential property will continue to expand.

The long-term trend with commercial property is less clear but there will always be demand for quality property in good locations. The recession and the impact of Internet trading is having a big effect on the high street and the current government policy of charging landlords full empty business rates is increasing uncertainty.

Legislation now appears to be striking a sensible balance between the rights of tenants and landlords, but with more severe rules designed to crack down on rogue landlords. If this can be sustained it will encourage more enterprising landlords (part-time investors as well as businesses) to offer improving standards of residential accommodation.

However, recent taxation changes have had a dampening effect on the buy-to-let market, though the returns still compare very well with alternative forms of investment for most people.

There is also a role to play for the small private landlord in providing commercial premises for the many small businesses needing accommodation on the high street and beyond.

In this way the private landlord make an increasingly important contribution to local communities, and the quality of life in the UK today.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The Story of “Landlording” – a brief History | LandlordZONE.

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Right to Rent facing two legal challenges

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Politics.co.uk are reporting the Right to Rent rules forcing landlords to check tenant’s immigration status and rights to remain are facing two independent legal challenges.

These rules have been deeply unpopular with landlords and agents who feel the responsibility of the state to monitor our boarders is being passed on to them with corresponding penalties for taking on this responsibility.

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Proving a listed building is EPC exempt if in fact it is?

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I have a few Grade II buildings and have always worked on the basis that they are exempt from EPCs. However, I have heard that as part of the EPC standard (i.e. must be E or above to let) that comes in in April

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Tenants notice period on Scottish PRT

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The generally accepted view on the new Private Residential Tenancy in Scotland is that the tenant can end the tenancy by giving 28 days notice at anytime after the the start of the tenancy. Having read the relevant legislation (Private Housing (Tenancies) (Scotland) Act 2016) I am confused.

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Will expanding HMO licensing improve PRS standards?

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HMO Rule Changes:

The government proposes to expand mandatory licensing of Houses in Multiple Occupation (HMOs). This provides another key opportunity to crack down on the minority of criminal landlords operating in the rental sector claims automated rental payments company, PayProp property managers.

The new rules could improve living standards for private renters while at the same time reducing the number of overcrowded properties, says PayProp.

Currently, compulsory HMO licensing only extends to properties which have three or more storeys.

Under the proposed new system, further details of which were announced in December but are yet to be fully agreed in Parliament, mandatory licensing of HMOs will include all properties that are occupied by five or more people from two or more households. The new rules are also aimed at over crowing, so will specify minimum room sizes.

It has been estimated that the rules will bring an additional 160,000 homes under mandatory HMO licensing.

Mandatory licensing of HMOs has been in effect since 2006, covering around 60,000 properties. The new system aims to bring more of the estimated 500,000 HMOs under licensing in a bid to push up living standards.

The government says:

“The increased demand for HMOs has been exploited by opportunist rogue landlords, who feel the business risks for poorly managing their accommodation are outweighed by the financial rewards.”

“[Criminal landlords] cause much reputational harm to the HMO market and it is often pot luck whether a vulnerable tenant ends up renting from a rogue or a good landlord.”

“We want to remove that uncertainty, particularly in high-risk-intensely-occupied HMOs, by creating a level playing field between landlords, so the rogues cease to be able to operate sub-standard accommodation for maximum profit.”

Getting all properties under one roof

Landlord licensing schemes are often criticised as money making projects, but bringing all HMOs under one framework seems a logical decision.

Neil Cobbold, Chief Operating Officer of PayProp in the UK, comments:

“As we can see, the number of HMOs has increased rapidly over the last decade.”

“With HMOs adapting and more of these properties now two storeys or fewer, it’s important that the legislation is brought up to date,” he says.

“Overcrowding has become one of the biggest issues in the rental sector and this increased regulation could contribute significantly towards solving the problem.”

Legislation only effective in action

Albeit welcome news for tenants, the majority of landlords and letting agents think these proposals just add to the legislative backlog of the private rental sector.

There is currently no date set for their introduction. However, the government says it is hoping to bring the new system into force later this year, subject to approval from both the House of Commons and House of Lords.

Other outstanding lettings legislation and policies include the ban on upfront letting agent fees, the movement to count private rent payments towards tenants’ credit scores, the reform of the leasehold sector and the national blacklist of criminal landlords and letting agents.

Cobbold adds:

“There has been plenty of change in the lettings sector over the last few years, but there are still numerous pieces of legislation that are yet to be introduced or existing rules which are not effectively enforced.”

“For all these measures to have a long-term positive impact on the industry, there must be appropriate action and enforcement. The more proposals that are made and consultations carried out, the more we risk further delay to policies. ”

Agent consultation responses are vital

PayProp recently encouraged letting agents to respond to as many consultations as possible when sharing its top five New Year’s resolutions for property professionals.

It is interesting to note that as part of the consultation for these proposed HMO measures, only 11 of 395 responses were from letting agents – representing less than 3% of the total number of respondents.

“It’s unlikely that the government will stop regulating and monitoring the rental sector so closely in 2018, so it’s vitally important that when presented with the opportunity, letting agents have their say and do their utmost to shape future legislation that benefits all parties,” Cobbold concludes.

Here is the initial HMO consultation which as now concluded.

About PayProp

PayProp is an automated transactional platform for the property management industry recognised as a Platinum Industry Approved Supplier by ARLA Propertymark setting the standard for speed and accuracy of payments. PayProp is part of the Humanstate Group, an international company with subsidiaries in the United Kingdom, Switzerland, Canada and South Africa.

https://uk.payprop.com/start

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Will expanding HMO licensing improve PRS standards? | LandlordZONE.

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Officially the WORST property I have ever been in!

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Last week, whilst filming in the town of March, Cambridgeshire, for the fourth series of Channel 5’s ‘Nightmare Tenants Slum Landlords’, I experienced the worst living conditions I had ever seen in my 27 years in this business.

Although a unique case

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Limited Company Mortgages With NO PERSONAL GUARANTEES!

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I think this could be absolutely massive …. a UK Building Society offering BTL mortgages to Limited Companies with ‘No Personal Guarantees’ and on interest only terms.

Granted, the maximum LTV is only 55% and the interest rates are not earth-shatteringly marvelous

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