Airbnb v PRS

21 Mar 2018

The rise of Airbnb versus regular renting…

More and more I hear property owners talking about whether they should try using their property for Airbnb or short term rentals as opposed to more typical long term letting. And recently when I attended a Propertymark conference it kept coming up as a major, MAJOR issue particularly in the Edinburgh rental market with many agents saying it was having a huge impact on the supply of rental property in the city.

What’s this Airbnb all about then?

Airbnb Logo

Airbnb is effectively a platform which allows you to market your property (or room) as a nightly or longer, flexible accommodation option to anyone caring to look. So you can rent out your property for just 1 night, for a week or for a few weeks and obviously you can capitalise on the premium that renters will pay for a short term accommodation option. You can set a minimum term of x number of nights. Clearly there are some essential requirements that your property will have to meet:

  1. Fully furnished and equipped as a self-catering accommodation option so good standard required
  2. Bedding, towels etc will have to be supplied
  3. Broadband and / or working TV probably required
  4. Meet and greet of  guests or alternative plan

Property Investment & AcquisitionPROS

  1. If your property is located in a sought after spot for tourists/visitors, great nightly rates can be achieved
  2. More flexibility with your property if you use it sporadically or are not sure on long term plans for it. You can control when it is used.
  3. Lower regulatory requirements than long term renting option
  4. Potential for lower tax burden


  1. All bills will be paid by you – council tax, utilities
  2. Property will have to be cleaned prior to each guest
  3. No references or checks done on anyone staying in your property (Risk of becoming party pad)
  4. Frequent replace/ upgrade of furnishings to maintain standards
  5. Time intensive for either owner or agent – frequent changeover = greater costs
  6. Potential issue with neighbours – can seriously impact social mix in certain blocks if a high proportion of owners choose to do short term rentals

So let’s take a typical 2 bed in Glasgow and 2 bed in Edinburgh

A 2 bed in Glasgow’s City/ West End will generate you around £110 per night – is it going to be rented all the time? When I check for property they don’t seem to be full but let’s be optimistic and assume you might have 200 nights of the year occupied.

£110 * 200 = £22,000 income with Airbnb

Versus £850 rent per calendar month with full rental year round = £10,200 income with regular rental

So income is about 50% more if you Airbnb… Sounds like a “no brainer”… BUT lets look a bit further…

What else do you need to allow for when you Airbnb…

Council tax £ 2,000 per year

Utilities £2,400 per year

Cleaning costs (£50 – £75 per changeover) £3,000 per year

Broadband and TV license £300 per year

Replace / Upgrade furnishings / linen etc £1,000

So already without even thinking too much about it we have almost another £9-10 k to the costs over 1 year which is making it a bit less attractive than on first view. That said, the income still looks to be more,  but it’s a seriously time consuming business changing over 50 or more times a year and you need to have the time to devote to it , or pay someone to do it. And if you choose to pay someone to do it, its 20-25 % that the agent will be taking. And you have to be pretty confident that you will fill the flat 200 nights or more…

Inititally I thought that the price you could get for Edinburgh similar rental would be more, but surprisingly that is not the case. Over most of the year the rate for a 2 bed center / West End is around £90-£100 per night, with August generating a big premium – around £160 per night so we need to tweak the figures.

£160*20 nights in August plus 180 nights @ £100 per night = £21,200

So we are almost the same as Glasgow rates with regular rental income at a little more , maybe £900 per month so £900 * 12 = £10,800 per annum.

Given the above, it made me think, if I had enough time and energy to manage it myself, clean it , launder the bedding etc, meet guests I probably might consider giving it a go, but it would be risky and I would see how it went. If I wanted a hands off approach I still can’t see how Glasgow or Edinburgh works out as a short term rental option for the owner.

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