According to new analysis by Direct Line insurance of home owners already taking part in short term lets some 63% swap houses and 69% rent out their whole property.
More than half, 58%, already rent out a room in their property on a short term basis, as they seek to earn extra cash and holiday makers look for alternatives to traditional accommodation choices.
On average, home owners expect to receive approximately £54 per room per night in rental income. During a week’s holiday this could amount to around £758 for an owner of a two bedroom property.
Under plans to remove a 40 year old rule that prevents Londoners from renting out their homes on a short term basis, something which doesn’t apply elsewhere in the country, the Deregulation Bill will give home owners in the capital the freedom to rent out their homes on a temporary basis without having to pay for a council permit.
Current laws state that private home owners in the capital must apply for planning permission if they wish to rent out their home for less than three months.
The research found that London home owners expect to receive the highest rental income, with an average of £116 per room per night, which could earn two bedroomed property owners some £1,629 over seven nights as savvy home owners seek to capitalise on sporting events like Wimbledon in the capital.
At the other end of the spectrum, Scottish based home owners expect to receive the lowest, at £31 per room per night. However, this could still earn owners of two bedroomed properties around £435 over the course of a week, which Glasgow based home owners may wish to take advantage of during the Commonwealth Games which get underway next month.
Although renting out a property on a short term basis can create welcome additional income, Direct Line warns that home owners should be aware of the risks involved, as only 29% of UK home owners who have rented out their property for a short period report never having incurred any damage.
Property damage can be expensive, with the average bill to repair or replace items reported as £326 while 20% faced costs of over £500 following renting out their property short term and 14% paid out over £1,000.
Of home owners who have rented out for a short period 29% said they have experienced damage to furniture, 27% damage to soft furnishings, 26% to windows, doors and walls, 16% to electrical items and 14% damage to white goods. One in four of these respondents reported theft of items from the house and home emergency damage, such as plumbing, heating or drainage in 23% of cases.
‘Short term lets can be a fantastic means of generating additional income, especially around holiday season. It is vital however, that home owners take the time to protect their properties,’ said Louise Lumley, head of the firm’s SELECT Premier Insurance sector.
‘Bills to repair or replace items as a result of damage can be expensive and may cost more than the amount earned from the rental. We recommend property owners inform their insurer, as their requirements may be different if letting out their home and this will protect against damage caused,’ she added.
Advice includes being aware of the different insurance and legal requirements for letting out your property such as third party liability and damage cover, loss of rent cover and the rules around taking back possession of your property.
Even if you’re only renting your property short term if the property is available to let for more than 140 days a year the property will be rated as a self catering property and valued for business rates.
If you’re considering subletting your room/property, run the idea by your landlord. If not you could run into a number of legal complications and if you have a mortgage, read the small print as contracts may forbid short term letting of your property.
