News
14 Jan 2016 02:35pm

Airbnb landlords accused of tax evasion

Professional landlords are using Airbnb and other home rental websites to avoid taxes and evade planning laws, according to Ufi Ibrahim, chief executive of the British Hospitality Association (BHA)

Ibrahim provided evidence to the Business Innovation and Skills committee this week, where she argued that home rental websites like Airbnb are made up of many large-scale landlords, operating multiple properties rather than individual homeowners to which the sharing economy was intended to service.

Airbnb was set up to allow homeowners to rent out spare rooms or entire homes for short periods.

Ibrahim claimed that more and more professional landlords are using the service to let their properties because they can earn more money than from traditional rents. She added that landlords are letting their properties on Airbnb for more than 90 days a year, in breach of housing regulations.

She shared industry research which estimates that 40% of all home rental website listings are professional landlords running unregulated “pseudo-hotels”.

She added that half of all home rental listings are entire properties rather than rooms in host’s own homes. London is the most affected with the largest number of landlords – 40% of all listings in London are multiple property owners renting accommodation on a short-term basis year-round, according to research cited by Ibrahim.

Ibrahim warned the committee that Airbnb landlords are failing to declare multiple properties to HMRC under the government’s “rent-a-room” scheme, which allows homeowners to earn up to £4,250 a year tax-free from hosting guests.

Ibrahim also claimed that Airbnb are allowing hosts to circumvent planning regulations and failing to carry out adequate checks on hosts.

Patrick Robinson, head of public policy in Europe for Airbnb, told the committee that most professional landlords in the UK were providing suitable holiday accommodation but also admitted that in some areas, professional landlords are putting strain on London’s housing stock. He added that Airbnb is working with councils to avoid this.

“We’ve introduced things that help to protect consumers. We’ve taken steps that go beyond what we’re legally required to do,” he said.

The BHA suggested three key proposals to regulate home exchange websites.

They recommended that home rental websites should share with government bodies (such as HMRC and London authorities and councils) information including: who is letting for over 90 nights in London; how many people are letting out a secondary residence; how much tax is due on the income; and how staff are employed and paid to service multi-rentals.

The BHA also recommended that home rental websites should directly restrict landlords from letting out for more than 90 days per year through their platform and should require much stricter checks on safety and security, something other sharing economy platforms, such as Uber, have already implemented.

A spokesperson for Airbnb responded, "These claims are baseless and inconsistent with the facts. The typical Airbnb host in the UK earns £2,000 a year by sharing space in their home for 46 nights a year. Airbnb helps grow and diversify tourism in the UK and provides an economic boost to countless families, communities and local businesses."

The spokesperson added, “More than 90% of UK hosts share their primary or secondary home and are covered by existing building regulations.”

“We require hosts to follow their local laws and we urge all hosts to take some basic steps to keep their homes safe, like installing functioning smoke alarm and carbon monoxide detectors, ensuring their home is properly ventilated and providing fire extinguishers and other safety equipment. And if guests alert us to a hazard or safety issue at a listing, we immediately suspend the listing and investigate.”

They said that Airbnb has always reminded hosts to declare their income and to pay any applicable taxes and hosts certify that they will do so.

“Hospitality is a large, growing market. There is enough room for everyone and we strongly believe we are helping more people to travel, which is good new for everyone,” the spokesperson added.

The Irish tax authourity forced Airbnb to disclose income of people renting out their homes online last year.

Although HMRC has not confirmed whether or not it will request Airbnb to disclose UK users’ information, a spokesperson told economia, "HMRC is fully committed to tacking all tax evasion. HMRC's let property campaign is currently targeting those who receive income from letting properties or rooms, to encourage self-compliance and focus enforcement action in this area. Where landlords do not make a voluntary disclosure, they may be charged higher penalties or face criminal prosecution. The campaign has helped over 10,000 landlords so far and brought in more than £50m."

Sinead Moore

 

Related articles

Tax relief cuts will affect renters

HMRC brings in £50m from landlord campaign

UK wants to be sharing economy hub

How to travel for business

Topics