Airbnb has taken the world by storm, with every second person now renting out their house (or parts of it) to keen travelers at a fraction of the price of other accommodation options. It has become particularly popular in Cape Town and so we did a bit of digging to find out how to start, if it’s worth it, and why so many young couples stay with the in-laws during peak season.
Airbnb provides a platform for you, as a host, to advertise a hospitality service or experience in your very own home, making some extra money on the side and offering affordable accommodation to those who are on a budget. It is a privately held global company which acts as a broker, and makes it very easy for you to register your home on their website. Once you have registered, the company then handles all the advertising. Basically, all you need is a home with a spare space to rent out – it can be anything from a shared room to a garden cottage. Airbnb also handles all payments once a booking has been made, so all you have to worry about is making sure your guests find your address and that they are happy and settled in.How to Start
Rental Earning Potential
Part of why it has become so popular is because Airbnb provides hosts with a good earning potential with little outlay. However, potential hosts need to bear in mind that this depends on mainly two factors:
Firstly, demand always plays a major influence in hospitality. Some months of the year will have you wondering if you made a huge mistake, but other months will have you employing a “first come first serve” system.
The other factor that will play a role in the earning potential is the Airbnb rating system. After a stay, a host is required to rate the guest according to a list and the guest can rate the host on the experience they had. In other words, good ratings equal more business.
A typical host on Airbnb in South Africa can earn around R28 000 a year by sharing their home for a mere 16 days a year. A pretty decent deal if you ask me.
Second Property Taxes
If you already own, or are considering owning, a second property to use as an Airbnb space, don’t forget the tax implications. In South Africa (besides the transfer duty upon purchase) if the owner wishes to sell the property, they would have to pay capital gains tax. Capital gains tax basically is determined by SARS on the net profit made from the property once the cost of the property is subtracted from the selling price. Also keep in mind that a property which earns a rental income is subject to being taxed. The rental income will need to be added to any other taxable income you may have.
Moving in with Your In-laws during Season to Let Out your House
Yes, you read right! Turns out this has become a trend in Cape Town – people actually go and live with their in-laws during peak season and rent out their spaces. Whilst this may seem like a good idea, it is actually a little bit…illegal. By law, it is not permitted to rent out an entire house or apartment on a short-term basis.” This law doesn’t apply to normal BnB’s and guesthouses because they provide accommodation within a house or a second house on the property and are correctly zoned. In terms of municipal planning by-laws, holiday letting is not allowed, for instance, in a block of flats. If the owner of a flat wants to use it for short term-letting, the space actually needs to be appropriately zoned and consent is needed from the city’s development management department.
With these facts and figures in mind, hopefully you will be able to decide if being an Airbnb host is for you. At the end of the day it comes down to you offering up a homely space or an experience for guests to enjoy, whether in your spare room, flat, house, mansion, or even your own room!
Norgarb Properties Agent Andre Ter Moshuizen who specialises in the Claremont area, shares some household tips and handy home hints with you every month.