New style ESA and airbnb income
Im trying to find information on how moving out of my house and putting it on airbnb would affect my ns/cb esa.
I keep coming across advice saying airbnbing one property is not a business and not self employment but rental income.
On the moneysaving expert forums people are saying it doesnt affect non-means tested esa. Ive looked through the DWPs advice to DMs and some of it seems to support that take on it but as it doesnt outright say it I dunno if I trust the impression Im getting. Im not sure if Im missing something that makes it clearer.
My local CAB are saying it is self employment and would mean Id be classed as doing permitted work, even if I did nothing towards the running of it myself, and lose ESA if my income went over £182.50.
It seems odd it could be considered self employed for benefits but not for taxes and nat ins.
I need to know which is true before I put my savings into getting the house set up for airbnb. My savings are limited so it feels like a huge risk. Im not sure how long I can keep struggling to maintain the house on benefits all the jobs are so expensive.... hence the airbnb idea.
Ive emailed the DWP asking the question but they thanked me for the "information on my main property" and asked me for my national insurance number and full name… they did not answer the question. Im reluctant to give them my name when they think Im giving them info rather than asking a question.
Comments
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DWP are not the ones you should be approaching for advice on this because they administer benefits, they are not advisors. A decision maker is also unable to make a decision on something before It happens.
I would be very cautious about the advice from Citizens Advice because having seen so many members here being given incorrect advice is shocking.
I would be guided by the advice you've been given on MSE because I know the people on there have exceptional knowledge in benefits.
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I feel the same about CAB, Ive been given dubious advice in the past myself. But, I suppose, that doesnt mean they are never correct.
This is my thread on moneysavingexpert
https://forums.moneysavingexpert.com/discussion/comment/80940603#Comment_809406030 -
I want to second that about CAB, as I have at times known more than they did, as well as them giving incorrect advice.
It feels as if they just read from the website of the CAB at times lol
There was one time where I actually had a solicitor who I hired using Legal Aid for defending a Section 21 eviction under the Housing Act, and at the time there was a 2018 case with a judgement that effectively set precedent by Judge Luba QC regarding Regulation 36 (6) of the Gas Safety Regulations 1998 (Caridon property Limited v Monty Shooltz) where it was ruled that the gas safety certificate was required to be served on the tenant before taking up occupation of the property, and if not it was not able to be rectified afterwards, thus not enabling a landlord to serve a Section 21 notice to evict without it being defective (this has since been overturned since 2020 I believe though from what I last checked, so I am pretty sure this can not be used as a defence anymore).
But my point was the lawyer I had with legal aid for my defence said that this was not correct, and I gave her a print out of the website which was a website for lawyers regarding housing law.
She never apologised to me admitting I was right and she was wrong when she figured out I was right after she clearly looked into it more and the defence worked lol, and that shows you that even solicitors can make mistakes (hopefully a lot less than the CAB though lol).
Btw, in case anyone is curious, I was not a bad tenant and my rent was up to date, the landlord just did not like how I asked for repairs, so I was not one of those "nightmare tenants" like on that TV show you see. I have empathy for honest landlords who get such nightmare tenants.
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Hi - I can only talk about the practicalities of letting a property that you own. You will have to pay the council's rates, water rates & gas & electricity, so these need to be factored in to your letting costs (with a tenant, then they instead would be responsible for these). You will need to consider what your house insurance will be like, & any additional costs you may have if your property is empty for more than 28 days (or whatever your house insurance company quotes).
You will likely have to pay a monthly amount to ensure the boiler & central heating can be maintained in case there are any problems with these, or, potentially pay more in the long run if an expensive repair/replacement is needed. Then a certificate each year ensuring the property complies with gas safety standards for a let property. Depending on the renovation needed, amongst other things, ensuring the current electrical standards are complied to can be expensive.
Then, what would you do if there were any problems during the stay of a potential customer? It's not as easy as perhaps you hope it may be. What would be the cost of cleaning the property between customers, & maintaining any outside space?
I'd suggest getting quotes for any work you consider may need doing before you potentially go down the airb&b route, then compare your property to similar airb&bs in your area, but first check the deeds to your property to see if there are any restrictions/covenants as to the use of your property.
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Yes the costs of running the house are likely to be a bit higher than they are now for me living in it, with increases in insurance etc. I will need to get certificates for electrical items the guests could use as well.
I assume can just move back in temporarily if its empty for more than 28 days and its causing issues with insurance… I should probably double check that.
The income from airbnbs here in my area is very high. Properties on my street, that are half the size of mine, are bringing in over a thousand pounds a week. These are very "polished" properties though so I will have to charge less for "shabby" initially. Even at £800 a week there is potential for a very nice profit if I can let it for 40 weeks a year- in the 28K region.
The capital required to get it ready for letting is my main concern. Its needs to be up to safety standards and at present it isnt. So that is going to take all of my savings and a pension lump sum I imagine, and Im not really sure even that will be enough yet.
Im hoping to get the Eco4 stuff done while Im still on UC; so there will be a heating system in, there isnt central heating at all at present.
If I dont get that done Im not going to meet the energy rating for rental properties in Scotland. So thats the first step.
Once thats done I will try to find out what else apart from rewiring (£10k) is needed and work out if I can afford to do it with what I have left.0 -
28K is a typo it should be 25K and that will be taxed of course so about 21K after tax. But all my sums are very much pencilled in at present as its going to take a while to get everything done so I can rely on costs staying the same-some of my costs are outright guesses for now.
It could obviously make a massive difference to my life if I could get this airbnb thing going as its far more than Im currently getting. Of course Im giving up my home in this airbnb scenario so its not all ideal.
House rentals to long term tenants are about £700 a month here so thats a lot less than airbnb brings in. I dont think that would be enough to cover some of the big bills coming up with my house, like re slating the roof. Obviously there is no hope of saving enough to do that on disability benefits.0 -
Yes I remember your post on MSE and I don't have anything else to add to the advice you were given on there.
If you move out of the property then your UC will end because you'll own a property you don't live in.
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While I cannot offer advice on the implications of ESA or other benefits, it's essential to understand the tax and regulatory considerations when operating an Airbnb property in the UK.
Whether classified as rental income or otherwise, the income generated from your Airbnb activities is likely subject to taxation. Reporting all rental income is a legal requirement, whether you are operating as an individual or a business entity. However, you can potentially reduce your tax liability by claiming allowable expenses related to the property, such as maintenance costs, utilities, and other operational expenses.
Another key consideration is the 90-day rule, particularly in London and possibly other areas, which limits the rental of entire properties to a maximum of 90 nights per year without planning permission from your local council. Airbnb automatically enforces this restriction on listings. However, if you are renting out a spare room within your primary residence, different regulations apply. Therefore, I strongly advise you to consult with your local authority to understand the specific rules that pertain to your situation.
Before launching your Airbnb venture, it's important to review the terms of your mortgage, though this step is not necessary if the property is owned outright. However, if your property is subject to a lease, you must carefully check your lease for any restrictions on subletting. I strongly recommend seeking professional advice to avoid potential pitfalls. I wish you all the best and sincerely hope this works out for you.
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No restrictions on number of nights per year in my area, no planning permission requirements either (there is great variation in the rates being charged on the properties that are airbnb-ing near me- between approx £1300 and £2500), no mortgage or lease.
Ive got an accountant pencilled into my expenses, but I might be underestimating how much they cost.
My main concern is getting the house up to standard and keeping it running while the business establishes. I might have enough savings to get it up to standard, I scared I wont.
But without the ESA I dont think I will be able to keep it running while it gets established… well not unless there is some other scheme like Back to Work running at the moment that could take the place of the ESA a bit. I will only have ADP to live off and most of that will go on renting a room in a friends house.
I am wondering if renting a room might be a way to establish if I can get enough bookings before I go the whole hog; I could maybe keep my UC then and see what it does to ESA (though maybe thats not the same for room to rent scheme).0 -
Income from a lodger will not affect your ESA or UC. For UC it will be treated as capital. If your capital is less than £6,000 then it's disregarded. If you're claiming single person discount for council tax then you will lose that if you have a lodger.
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