Airbnb investing is illegal / no planning permission?

Thegeneralist

Hi, this was discussed a while ago and the thread was closed.

I am thinking about buying a 1 bed apartment in Dublin in order to use it exclusively as a short-term rental (on Airbnb and other websites).

However judging from media stories and online discussion, it sounds as if the Irish government wants to make this illegal, or that I would be refused planning permission if I applied, and would therefore be unable to do it legally.

Does anyone know what the current situation is, or insight into what is going to happen?

athtrasna

You will hit issues left right and centre here.

Most apartment complexes prohibit short term letting in the documents you sign at purchase.

You will pay tax on all income.

The planning thing is being looked at and given the shortage of housing in Dublin it is entirely possible that short term lets will require pp in the very near future.

Thegeneralist

Thanks

I am prepared for the inevitability of paying income tax on profits.

I just need a legal route to doing it at 80% occupancy.

Maybe I should act like uber and just do it.

Spanish Eyes

I thought planning permission was required due to a recent ruling. Am I wrong?

Alf Veedersane

Spanish Eyes wrote: »

I thought planning permission was required due to a recent ruling. Am I wrong?

ABP ruled it was required at the end of last year.

gizmo81

As always there is conflicting information

Dec 2016 Coveney said


Landlords are not allowed to use Airbnb for the short-term letting of their properties unless they get planning permission for bed and breakfast or hotel status, Minister for Housing Simon Coveney has confirmed.

https://www.irishtimes.com/news/politics/oireachtas/landlords-need-permission-for-airbnb-lets-minister-confirms-1.2914873

Aug 2017

Eoghan Murphy is close to agreeing a deal with Airbnb that would prevent landlords turning residential properties into commercial short-term lets without planning permission.

https://www.thetimes.co.uk/article/dublin-to-clamp-down-on-airbnb-lets-c536gzhdm

One important thing to note if buying a an apartment is the management company could block you from listing the property on Air BnB

https://www.irishtimes.com/news/ireland/irish-news/spencer-dock-dwellers-seek-clarity-on-airbnb-ban-1.2838457

Also other bans in apartments have been in the media.

athtrasna

You'll pay income tax on income, not profits.

Re planning permission, An Bord Pleanala ruled that it is required but the government working group set up to clarify the situation has yet to report.

Thegeneralist

athtrasna wrote: »

You'll pay income tax on income, not profits.

Re planning permission, An Bord Pleanala ruled that it is required but the government working group set up to clarify the situation has yet to report.

You are wrong about tax on all income.

I am already a self employed sole trader and discussed this in principle with my accountant.

athtrasna

Thegeneralist wrote: »

You are wrong about tax on all income.

I am already a self employed sole trader and discussed this in principle with my accountant.

There's no tax free allowances and like any private rental not all expenses are allowable as deductions from your tax bill.

Victor

Systematic short-term letting without planning permission has always been illegal (well, since 1963) and this was stated in a Lansdowne Village case in the 1990s and repeated by the case before ABP last year.

Thegeneralist wrote: »

it sounds as if the Irish government wants to make this illegal

They are unlikely to make short-term letting (rural tourism depends on it) or Airbnb illegal. They may working towards legislating short-term letting properties as different from residential properties.

that I would be refused planning permission

This is not a foregone conclusion, but you are unlikely to get planning permission for short-term letting in an existing apartment development. In cities, this might even apply if you own the whole building.

There is nothing stopping you building your own properties with a planning permission for short-term letting.

Thegeneralist

athtrasna wrote: »

There's no tax free allowances and like any private rental not all expenses are allowable as deductions from your tax bill.

You've gone from 'tax on all income' to 'not all expenses are deductible'!

But I want to discuss PP not tax, so won't pursue this any further.

FWIW my accountant gave a long list of deductible expenses including cleaning fees, wear and tear, pre-letting expenses and commission to AIRBNB. So pretty much everything.

Thegeneralist

Thanks Victor, much appreciated!

So in Dublin city it's a non-runner, as I feared.

There are 25 properties being investigated by DCC at the moment for breaching planning law. Not sure what penalties the owners might face.

It doesn't sound like it's worth taking the risk.

Victor wrote: »

Systematic short-term letting without planning permission has always been illegal (well, since 1963) and this was stated in a Lansdowne Village case in the 1990s and repeated by the case before ABP last year.

They are unlikely to make short-term letting (rural tourism depends on it) or Airbnb illegal. They may working towards legislating short-term letting properties as different from residential properties.

This is not a foregone conclusion, but you are unlikely to get planning permission for short-term letting in an existing apartment development. In cities, this might even apply if you own the whole building.

There is nothing stopping you building your own properties with a planning permission for short-term letting.

Marcusm

athtrasna wrote: »

You'll pay income tax on income, not profits.

Re planning permission, An Bord Pleanala ruled that it is required but the government working group set up to clarify the situation has yet to report.

That's incorrect, income tax under Case V of Schedule D is applied to the full amount of profits/gains arising from the letting of land/property in the State - not the gross rental flows.

Marcusm

athtrasna wrote: »

There's no tax free allowances and like any private rental not all expenses are allowable as deductions from your tax bill.

TAx free allowances haven't existed since 2001; the same system of tax credits is available to all taxpayers. Those who are self employed or proprietary directors receive a lower level of tax credits than employees. The OP might very well be an employee. Not all expenses are ever allowable for tax purposes - the expenses permitted against rental income are revenue expenses wholly & exclusively incurred to earn the rental income. An employee would have a higher standard (necessarily is also added). An investor in shares, for example, does not get interest relief, unlike a landlord.

relax carry on

Marcusm wrote: »

That's incorrect, income tax under Case V of Schedule D is applied to the full amount of profits/gains arising from the letting of land/property in the State - not the gross rental flows.

Not exactly correct. Airbnb income would be case 1 trading income or case iv miscellaneous income not case 5 rental income.

Marcusm

relax carry on wrote: »

Not exactly correct. Airbnb income would be case 1 trading income or case iv miscellaneous income not case 5 rental income.

I would disagree; unless the level of services being provided rose to that provided by a B&B or a hotel (not contemplated by the OP), then I think case V is the appropriate head of charge. The original AirBnB involved someone staying in the founder's apartment and getting breakfast. The OP seems to contemplate a simple short term letting arrangement - that is case V income not case I (and certainly seems to be more systematic than the type of casual profits generally assessable under case IV).

Victor

Marcusm wrote: »

I would disagree; unless the level of services being provided rose to that provided by a B&B or a hotel (not contemplated by the OP), then I think case V is the appropriate head of charge.

I think Revenue have issue opinion on this that it is more like a service than a rental. In most rentals you don't get bed sheets and daily/weekly cleaning.

relax carry on

Marcusm wrote: »

I would disagree; unless the level of services being provided rose to that provided by a B&B or a hotel (not contemplated by the OP), then I think case V is the appropriate head of charge. The original AirBnB involved someone staying in the founder's apartment and getting breakfast. The OP seems to contemplate a simple short term letting arrangement - that is case V income not case I (and certainly seems to be more systematic than the type of casual profits generally assessable under case IV).

It was from revenue's ebrief on the rent a room provision some Airbnb hosts were using.

http://www.revenue.ie/en/tax-professionals/ebrief/2015/no-212015.aspx

Income from the provision of accommodation to occasional visitors for short periods, including, for example, where the accommodation is provided through online accommodation booking sites, does not qualify for relief as the visitors use the accommodation as guest accommodation rather than for residential purposes. Income from guest accommodation that is occasional in nature is taxed as other income (Case IV), or where a trade exists, such as a bed and breakfast or a guesthouse operation, it is treated as trading income (Case 1).

Some movement from the government on this

Minister for Housing Eoghan Murphy said he would be introducing the new licensing system for short-term lettings, in comments that did no mention Airbnb by name. However any such rules would directly impact Airbnb lettings.


The online room rental service has grown strongly around the world and in Ireland over the last number of years. But the growth is not without controversy. It emerged in July that Dublin City Council was investigating 25 suspected cases of homes being illegally used as Airbnb or other holiday rental accommodation.The council’s planning enforcement department took action in relation to complaints that the homes, most of which are apartments, are being used as short-term rentals without planning permission. An Bord Pleanála last year upheld a council decision that an apartment in Temple Bar had been changed from residential use to short-term letting and that change was not exempt from requiring planning permission.


Speaking to reporters at the National Ploughing Championships in Co Offaly on Tuesday, Mr Murphy said: “The rise of the sharing economy has led to a growth in the availability of short-term lettings for tourism purposes, with a corresponding need for an increased supply of rental properties in those same areas,”


He said a cross-Government working group including the Department of Transport, Tourism and Sport and Fáilte Ireland will come up with the licensing and regulatory system.


“ This will take more time to develop. In the meantime, I have instructed my Department to prepare specific guidance and advice for local authorities, which should issue in the coming weeks, to inform their decision-making on planning applications related to short-term lettings.


He added: “Just to be clear, I think that home-sharing - renting a room in your house for overnight guests or letting your whole home while you are on holidays - is a good idea. This can be an important source of income, helping ‘home-sharers’ meet the costs of mortgages, rents or other household expenses - and actually supporting tenure security. It also supports tourism and associated economic activity and even social and cultural exchange.


“But home sharing needs to mean actually home sharing.
“When landlords who normally provide residential rental accommodation turn to short-term lettings or when investors purchase residential units for the same purpose, these homes are lost to the housing system, and can exacerbate the already tight supply of properties for normal renting.”

https://www.irishtimes.com/news/social-affairs/people-renting-out-rooms-on-airbnb-will-need-licence-under-new-plan-1.3227584

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Thegeneralist wrote: »

Maybe I should act like uber and just do it.

That's what I'll be doing.

If I can't charge the market rate with a normal let I must find another way. There are numerous ways I have found out. I'm going to try Airbnb first though.

LiamoSail

I'm quiet impressed with Eoghan Murphy's comments on Airbnb. Airbnb etc. should not be banned, however it should be limited only to the lister's PPR. That would ensure the numerous landlords currently utilising Airbnb sell or return them to the market as long term lets

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LiamoSail wrote: »

I'm quiet impressed with Eoghan Murphy's comments on Airbnb. Airbnb etc. should not be banned, however it should be limited only to the lister's PPR. That would ensure the numerous landlords currently utilising Airbnb sell or return them to the market as long term lets

In Dublin it's going to go the way of letting to companies instead of individuals.
Probably not in the rest of the country though.

He could solve the whole flight to short term or elsewhere problem by allowing all landlords caught out by the legislation to let at market rate. Then they won't care if it's capped after that. They are the ones leaving.
After he sorts that out he then needs to look at overholding.

LuckyLloyd

Good to see, and absolutely expected.

mrslancaster

LiamoSail wrote: »

I'm quiet impressed with Eoghan Murphy's comments on Airbnb. Airbnb etc. should not be banned, however it should be limited only to the lister's PPR. That would ensure the numerous landlords currently utilising Airbnb sell or return them to the market as long term lets

Would it mean that a tenant could not utilise Airbnb?


Quote
“ This will take more time to develop. In the meantime, I have instructed my Department to prepare specific guidance and advice for local authorities, which should issue in the coming weeks, to inform their decision-making on planning applications related to short-term lettings.


Does this mean B&B's with less than 4 rooms will now need planning permission or will that stay as it is?

Marcusm

relax carry on wrote: »

It was from revenue's ebrief on the rent a room provision some Airbnb hosts were using.

http://www.revenue.ie/en/tax-professionals/ebrief/2015/no-212015.aspx

Income from the provision of accommodation to occasional visitors for short periods, including, for example, where the accommodation is provided through online accommodation booking sites, does not qualify for relief as the visitors use the accommodation as guest accommodation rather than for residential purposes. Income from guest accommodation that is occasional in nature is taxed as other income (Case IV), or where a trade exists, such as a bed and breakfast or a guesthouse operation, it is treated as trading income (Case 1).

Late spot; that is in the context of using Airbnb to allow guests to stay in the hike where you live and deals with the fact that the income does not qualify for rent a room relief nor fall into rental income. That is entirely correct; however, the OP is speaking about purchasing a owned bed apartment and letting the whole property on a short term basis. There is no reservation of the property and no suggestions of services akin to a B&B or hotel. It would be DV income.

subrosa

mrslancaster wrote: »

Would it mean that a tenant could not utilise Airbnb?

I'd imagine that a tenant listing a property on AirBnB would fall foul of the usual provision in leases forbidding commercial activity?

wordofwarning

LuckyLloyd wrote: »

Good to see, and absolutely expected.

Good to see? Its nice to see this token gesture at solving the housing crisis pleased some...

A good thing to see would be quicker evictions for non-paying tenants (one of the reasons why people Airbnb). Until the Government do it, there will be minimal desire for landlords to supply more housing.

Absolutely expected is right. The Government is doing everything in their power to reduce landlords rights and make owning a property as an investment unattractive. Although based on previous posts your issue was with the fact Airbnb tended to be run by non-nationals?

Are the state going to allow former Airbnb properties enter the long term letting market with an exemption on the rent cap? I can't imagine all the landlord who used Airbnb to deal with the fact they had a significantly below market rate being happy to put on the market for a fraction for its current market rent? I can see a lot of former Airbnbs sitting empty for months until the rent cap is no longer applied to them

But hey, banning Airbnb is not to solve the housing crisis. It is a quick win for pleasing the ignorant masses who think it will solve the housing crisis...

__..__

wordofwarning wrote: »

Good to see? Its nice to see this token gesture at solving the housing crisis pleased some...

A good thing to see would be quicker evictions for non-paying tenants (one of the reasons why people Airbnb). Until the Government do it, there will be minimal desire for landlords to supply more housing.

Absolutely expected is right. The Government is doing everything in their power to reduce landlords rights and make owning a property as an investment unattractive. Although based on previous posts your issue was with the fact Airbnb tended to be run by non-nationals?

Are the state going to allow former Airbnb properties enter the long term letting market with an exemption on the rent cap? I can't imagine all the landlord who used Airbnb to deal with the fact they had a significantly below market rate being happy to put on the market for a fraction for its current market rent? I can see a lot of former Airbnbs sitting empty for months until the rent cap is no longer applied to them

But hey, banning Airbnb is not to solve the housing crisis. It is a quick win for pleasing the ignorant masses who think it will solve the housing crisis...

Instead of just allowing all landlords to charge market rate they will just try to ban Airbnb. Then after that they will try to make the Airbnb properties go to long term. It won't work. As you said there's a reason they aren't doing long term and went to aribnb.
Then instead of fixing the problem at source they will just keep bringing new rules and chasing landlords through every loophole. Landlords will do anything not to have to rent below market rate and at the same time be laid bare to all the risks.
Let them bring their rent to market rate and you will at least get a percentage of them bringing their properties back to the rental market.

The happiest people will by the hotels if you ban Airbnb.

mariaalice

It wont be banned but will be regulated and different rules might apply in urban areas of high rental demand as opposed to rural tourism.

People have to be realistic investors hoovering up properties to set up on air bnb in areas of high rental demand the government has to step in some way.

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mariaalice wrote: »

It wont be banned but will be regulated and different rules might apply in urban areas of high rental demand as opposed to rural tourism.

People have to be realistic investors hoovering up properties to set up on air bnb in areas of high rental demand the government has to step in some way.

Very easy to stop it. Make long term renting more attractive. Landlords don't actually want to be doing Airbnb. They have no choice if they are doing it.

Pepe LeFrits

__..__ wrote: »

Very easy to stop it. Make long term renting more attractive. Landlords don't actually want to be doing Airbnb. They have no choice if they are doing it.

Given the number of full-time, airbnb investor vehicles that were available on the site before any rent caps were brought in, I very much doubt that is true.

A lot of reflexive strawman arguments being offered - nobody is saying that banning investor airbnb lets will solve the housing crisis. No one thing is going to do that. It'll be a positive increment though.