Guide To Serviced Accommodation Rules & Regulations
If you’re considering offering your property as a serviced accommodation, it’s essential to understand the legal requirements and guidelines that need to be followed.
This guide will walk you through everything you need to know, ensuring you stay compliant and avoid any legal issues.
Whether you’re a property owner, manager, or investor, having a firm grasp on the regulations surrounding serviced accommodation is crucial for success.
By following these rules and regulations, you can provide a safe and enjoyable experience for your guests while protecting your investment. So, let's dive in and explore everything you need to know about the rules and regulations governing serviced accommodation.
Serviced Accommodation 90 day rule
The 90-day rule is a crucial regulation that governs serviced accommodation in many regions. This rule stipulates that a property can only be used for short-term rentals for a maximum of 90 days per year. After this threshold is reached, the property must be used for long-term residential purposes.
Reasoning
The rationale behind the 90-day rule is to maintain a balance between the availability of long-term housing and the demand for short-term accommodations.
By limiting the number of days a property can be used for serviced accommodation, the rule aims to ensure that a sufficient number of residential properties remain available for long-term renters and homebuyers. This helps to prevent the housing market from being dominated by short-term rentals, which can drive up prices and reduce the supply of affordable housing options.
It's essential for property owners and managers to be aware of the 90-day rule and to strictly adhere to it.
Failure to comply with this regulation can result in:
Hefty fines,
Legal issues,
Potential revocation of licenses or permits.
Locations in the UK Where the 90 day rule Applies
Greater London.
Edinburough.
Property owners should keep detailed records of their short-term rental activity and be prepared to provide documentation to the relevant authorities if required. By understanding and following the 90-day rule, serviced accommodation providers can ensure they operate within the legal framework and avoid any potential complications.
Other serviced accommodation regulations
Licensing and registration:
In many regions, serviced accommodation providers are required to obtain a specific license or registration to operate legally, this however does not apply to landlords in England but it could happen in the future and does apply for landlords in Scotland.
This may involve obtaining a form of:
Business license.
Short-term rental permit.
A hospitality license, depending on the local regulations.
For more information read this article published by HMRC.
Some other important things to note:
Waste Collection - If the local council finds you to be doing Airbnb or serviced accommodation in your property, they will refuse bin collection, you will need to find a local commercial waste company and should not cost much more then £30-£60 PM.
Business Rates / Council Tax - You may in the future need to change from council tax to business rates when using your property as serviced accommodation, but currently this is not a rule more a guideline.
Mortgages - You will need a holiday let mortgage, residential or buy to let mortgages will not be compliant for serviced accommodation and could be considered mortgage fraud.
Health and safety standards:
Serviced accommodation providers must adhere to strict health and safety regulations to ensure the well-being of their guests.
Currently this includes requirements for:
Fire safety - Fire doors, fire extinguishers & smoke alarms need to be in the property.
Emergency procedures - Mostly used in the event of a fire, have a written out access plan and keep it on the wall of a communal area.
Health & Safety Equipment - A first aid kit will do.
Planning and Zoning:
The use of a property for serviced accommodation may be subject to planning and zoning regulations, currently this does not apply in England but it is likely to happen in the future.
Property owners must ensure that the intended use of their property is in compliance with local land-use and zoning laws, which may restrict the number of days a property can be used for short-term rentals or the type of accommodation that can be offered.
Guest registration and record-keeping:
Many regions require serviced accommodation providers to maintain detailed records of their guests, including their personal information and the duration of their stay. This information may need to be made available to the relevant authorities upon request, do not worry if this feels like a lot of paper work, all channel management software platforms which are essential in running a serviced accommodation business will keep a record for you and store it for you to access at anytime, it will also have all the information you will need.
Serviced Accommodation Tax & VAT
Taxation and value-added tax (VAT) are crucial considerations for serviced accommodation providers. The tax implications can vary significantly depending on the jurisdiction, the type of property, and the specific services offered.
VAT
The value-added tax (VAT) is an important consideration for serviced accommodation providers. In many countries, the provision of short-term accommodation is subject to VAT but if your accountant can do it, you can apply for TOMS, this will make you pay VAT on profit vs turnover which is a massive help in profitability in your serviced accommodation property.
Important things to note:
Not every accountant does TOMS so you need to find one that can, we recommend Riverview portfolio.
TOMS accountants will cost a lot more than regular accountants both in terms of hourly charge and how many hours they do on your books.
VAT is not applicable for guests staying over 28 days, this is because guests staying over this length of time are classed as “long term” and tenant like, so they do not need to have VAT charged to them.
As much as it is important to do this from the beginning, you will not need to become VAT registered until you exceed £90,000 off revenue.
TOMS
You should use TOMS if you buy in and resell accommodation, passenger transport, car hire, trips/excursions, guides or airport lounges as principal to a consumer. TOMS is better than registering for VAT in every country in which you operate.
TOMS is a year-end tax calculation. Think of it like a corporation tax computation. It makes you pay UK VAT on the margin on EU destinations. You cannot reclaim UK or foreign input VAT on the corresponding costs of sale so the overall effect is that you pay VAT on the selling price of EU accommodation.
Important things to note:
HMRC does not like R2R companies or serviced accommodation companies using TOMS, but currently you can apply, this has gone to court and was ruled that serviced accommodation companies can use this rule, however HMRC are contesting it.
TOMS is quite complicated as most accountants will say, to better explain read this article on the government website.
Tax
Serviced accommodation companies will pay the normal rate for corporation tax which currently stands at 20% of gross profit, some items you can claim back as expenses:
Rent/mortgage costs.
Utilities.
Furniture.
Interior design.
Kitchen & Bathroom appliances.
Fuel
Speak to an accountant for more information on this.
Conclusion
Navigating the rules and regulations surrounding serviced accommodation is a crucial aspect of operating a successful and compliant business. From the 90-day rule to licensing requirements, health and safety standards, and tax implications, there are numerous legal considerations that property owners and managers must be aware of and adhere to.
By understanding and following these regulations, serviced accommodation providers can ensure they offer a safe and enjoyable experience for their guests while protecting their investment and avoiding potential legal issues. Additionally, compliance with these rules and regulations can help to maintain a balanced and sustainable short-term rental market, benefiting both the accommodation providers and the local community.
As the serviced accommodation industry continues to evolve, it's essential for property owners and managers to stay informed about the latest regulatory changes and best practices. Regularly reviewing and updating their knowledge, seeking professional advice when necessary, and maintaining detailed records can help serviced accommodation providers navigate the complex legal landscape and ensure the long-term success of their business.
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