Buying Property for Airbnb UK - How to Get Started

Traditionally, investing in buy to let property has been one of the most stable and assured methods of generating a lucrative, long-term passive income.

As the UK market is historically one of the strongest and most resilient in the world, it’s easy to see why global investors consistently choose thriving cosmopolitan cities like London, Liverpool and Manchester in which to direct their capital.

Norms and traditions, however, are two things that have increasingly taken a back seat in all walks of modern life. So, what of the contemporary world of buy to let property investment?

Well, although many of the traditional trends remain the same like the UK’s relative market strength and the consistent performance of important regions outside of London – particularly the North West -, there have been some notable market shifts that serious investors simply shouldn’t ignore.

Among the most significant of these is the rapid move towards investing in short-term rental property, thanks largely to the steady rise of Airbnb – the world’s leading online booking platform for holiday lets.

What is an Airbnb in the UK?

Airbnb and similar companies like booking.com and Spare Room have enabled regular homeowners to become high-earning landlords, revolutionising the industry on a scale never before encountered.

Every type of property of every shape, size, spec and location now has the potential to earn homeowners a sizeable extra income, while providing holidaymakers with a more cost-effective and independent experience than the traditional hotel stay can offer.

There are, however, a number of factors to bear in mind before entering the market and like any investment, there are certain strategies that will maximise the income you can generate from Airbnb lets. This includes researching how to start an Airbnb business in the UK, and delving into the most profitable Airbnb locations.

So let’s delve a little deeper into how to invest in Airbnb properties!

For those wondering how to start investing in Airbnb properties, it’s understandable that the specific type of planning permission needed may not be the first thing that springs to mind.

Without it, however, your short-term letting business is a non-starter.

Legal Requirements for Airbnb in the UK

In most places, there is a threshold regarding the number of days you can rent out your property for short periods before needing specific planning permission.

In England for example, planning permission is required when you let your property for a combined period of 90 days for short stays.

If you are not required to pay council tax on the property in question, then you will also need planning permission if you have any intention of renting it out.

Either way, ensure that you have obtained the required permissions from the council or relevant local authorities in your area before advertising the property for short-term lets, as regulations can vary from place to place.

In terms of an efficient, secure and legal investment strategy, investing in properties that have approved C1 planning consent is regarded as the best course of action when buying an Airbnb investment property.

This is the same class that covers hotels and guest houses and will therefore enable you to legally advertise your property on Airbnb and run a legitimate short-term lettings business.

For further information on UK planning laws, check out the official government website

Can you get a mortgage for an Airbnb property and if so, what sort of mortgage options are out there when it comes to making this kind of purchase?

This is among the most frequent queries for those hoping to enter the short-term rental market as an investor and wondering how to invest in an Airbnb property in a secure and affordable manner.

So, let’s take a minute to consider the types of mortgages most commonly available.

Although the mortgage option most suitable to you will depend on the type of property you invest in, the mortgage provider you use and your financial circumstances, the following are the types of mortgages you’re likely to encounter as you look into buying an Airbnb investment property.

Holiday Let Mortgage

When researching how to start investing in Airbnb properties, it’s likely that the holiday let mortgage option has crossed your path and understandably so.

In terms of investing in Airbnb properties, short-term rentals and other types of holiday homes to be advertised for short lets, taking out a holiday let mortgage is probably the most suitable option.

Much like buy to let mortgages, lenders will usually require a significant deposit of around 25% of the property’s value which can prove an expensive initial investment.

Additionally, to be granted this type of mortgage, mortgage lenders often require the property to be rented out as a business and can stipulate that borrowers earn a certain income.

Most importantly, in order to obtain a holiday let mortgage, the property must be available to rent for at least 210 days a year.

Finding a mortgage broker that will offer you a holiday let mortgage can be difficult, so seeking expert mortgage advice from a specialist lender is highly recommended.

Buy to Let & Residential Mortgages for Airbnb

When first exploring how to start investing in Airbnb properties, it’s likely that these are the mortgage types that sprang to mind.

Generally speaking, though, you won’t be able to use a regular buy to let or residential mortgage to purchase an Airbnb property.

This is typically because the property is going to be used as a business with a high turnover of short-term tenants and so the potential earnings are much higher than rental properties with long-term residents, something that providers will be aware of.

Similarly, residential mortgages are difficult to secure when a property is being purchased to rent out on a short-term basis.

In some cases, residential mortgages can be used if a homeowner intends to rent out specific rooms in a property, but providers can limit the number of days your property can be rented out which isn’t ideal when trying to start an Airbnb business.

Either way, securing the right mortgage that will allow you to make a solid, affordable investment while staying on top of interest rates and mortgage payments is essential, so it’s well worth seeking the advice of an experienced broker.

It’s undeniable that Airbnb properties have the potential to generate huge rental returns, but unfortunately, potential alone will not boost your bank balance.

As I’m sure you’ve already gathered, with successful short-term letting businesses, location is everything!

Now, although Airbnb is famous for having rental properties in pretty much all environments in every corner of the globe, there are some key recommendations when it comes to investing in a property that will provide steady returns and high occupancy rates throughout the calendar year.

Best Airbnb Locations in the UK

To achieve this, buying an Airbnb investment property in a popular UK city that offers a combination of affordable prices, strong rental yields, high visitor rates and regular music and sporting events is usually a winner!

Take Liverpool for example.

A city with a rich history, world-renowned character, popular nightlife scene, two premier league football clubs and the birthplace of the band that changed music forever – need I say the name?…

Liverpool is an ideal location to invest in a short-term rental property in terms of securing bookings all year round.

Additionally, the average property price in Liverpool is almost £110,000 below the UK average according to the most recent House Price Index, while rental yields for Airbnb properties range anywhere from 10-15%.

Of course, there are many great places to consider in terms of buying property for Airbnb UK, and it’s essential to dedicate time to researching a range of areas in order to find the best investment for your short-term letting enterprise.

Yes! As far as investing in buy to let properties go, renting out a property on Airbnb is among the highest earners in terms of rental income.

Of course, managing and maintaining such a property can require an ongoing time and financial commitment and, as with any investment, there is always a certain degree of risk attached.

To ensure the success of any short-term rental business, keeping on top of outgoings such as home insurance fees, mortgage repayments and further interest payments is essential.

But when all factors are considered, the pros far outweigh the cons in this case!

Additionally, enlisting the services of a property management company that will take care of all day-to-day landlord duties is an excellent option to consider if you don’t have time to manage the property on your own but are still keen on buying an Airbnb investment property.