Renting out your property on Airbnb can be a great way to earn extra income. But before listing your home on the platform, it’s important to understand the various fees charged to hosts. This will help you determine whether short-term rentals are truly worth it financially.
We’ll break down the key Airbnb host fees and taxes so you can calculate your potential earnings accurately.
How Much Does Airbnb Charge Hosts?
As a host, you’ll pay a small Airbnb service fee, while guests take on the bulk of Airbnb’s charges. Specifically, hosts pay a 3% service fee based on the subtotal of each booking. The subtotal includes your set nightly rate plus any extra fees you charge, like a cleaning fee. It does not include Airbnb’s service charges or taxes.
Guests pay a higher Airbnb service fee percentage – around 14% of the subtotal. This helps cover Airbnb’s costs for providing the platform and support services. For example, say your nightly rate is £100 and you charge a £60 Airbnb cleaning fee, a 3-night booking would have a subtotal of £360. As the host, you would pay a 3% service fee on that subtotal, or £10.80. The guest would pay an additional 14% service fee of £50.40.
So in total:
- You as the host earn £349.20
- The guest pays £410.40 overall
By having guests take on the bulk of service fees, Airbnb allows hosts to earn more per booking compared to some other platforms. The relatively low 3% host service fee helps maximise Airbnb host income.
Understanding Airbnb Taxes for UK Hosts
As a host in the UK, you’ll need to be aware of Airbnb tax implications. The specific taxes depend on factors like whether you live in the rented property, your total hosting income, and how long you’ve been renting it out.
In most cases, you’ll pay rental income tax on earnings from Airbnb hosting. This applies regardless of whether you rent out an entire property or just a spare room. Additionally, you may need to pay:
- Council tax if renting out a property located in a council tax area, even if unoccupied
- Business rates set by local councils, which are a tax on the rental value of the business property
- VAT if your Airbnb hosting turnover exceeds £85,000
It’s important to keep accurate records so you can properly report your income and remit any taxes owed. Professional advice from an accountant can also help ensure you remain compliant with UK tax rules for Airbnb hosts.
Airbnb Host Income & Earnings
Obviously, hosts want to know how much they can actually make. Airbnb host earnings depend on factors like the location of your rental property, nightly rate and availability, seasonality and demand, and any additional fees charged.
According to Airbnb, hosts typically earn just over £6,000 a year, but urban locations tend to be more lucrative. As you determine your nightly rate, make sure to account for Airbnb’s fees.
Can You Negotiate Airbnb Host Fees?
Unfortunately, Airbnb’s standard host fees are non-negotiable. All hosts pay the same service fees based on their bookings, but you can minimise your payouts to Airbnb by:
Setting competitive nightly rates to drive more bookings
Research rates for comparable listings in your area so you can price your property competitively to attract more bookings. The more nights booked, the more you earn even after Airbnb’s fees. Frequently review and adjust your rates too.
Adding extra fees like cleaning fees when applicable
Cleaning fees and the Airbnb extra guest fee can allow you to earn more without raising the base nightly rate. Add these optional fees when appropriate to increase your subtotal and minimise the percent lost to Airbnb.
Enforcing stricter a stricter Airbnb cancellation policy to avoid refunds
Stricter cancellation policies mean fewer cancellations and refunds. This results in higher earnings for you as the host, since Airbnb only takes a percent of completed stays. Make sure your Airbnb host refund policy deters last minute cancellations.
Ensuring your listing has great photos, reviews, and high visibility
An appealing, high-quality listing gets more bookings. Invest time in professional photographs, detailed descriptions, and amenities that attract guests. Promptly respond to all booking inquiries too. Good reviews also drive bookings which boost Airbnb host income.
The key is maximising bookings and occupancy. That way, even as Airbnb takes its cut, you earn the highest possible income from your property. Careful optimisation of all listing factors is better than trying to negotiate the fixed Airbnb fees.
53 Degrees Property Airbnb Management Services
While Airbnb does charge hosts a significant service fee, for many property owners the platform’s unparalleled reach and booking volume outweighs the costs. However, handling all aspects of short-term rentals on your own can be extremely time-consuming.
This is where specialised services like 53 Degrees Property can help. Our Airbnb and service accommodation management takes care of everything from pricing to guest services. This frees up your time, while our expertise in short-term rental in Liverpool and in the rest of the UK drives bookings and occupancy.
To learn more about our stress-free approach to accommodation management, contact 53 Degrees Property today. We’re here to help maximise your rental property’s income potential.
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