Unexpected consequences of AirBNBs in Jersey
21 May 2019
The AirBNB concept is relatively simple: AirBNB connects people with a short-term and often informal accommodation requirement with those willing to offer it to them. Where previously travellers would check into a hotel, bed and breakfast or similar, they can instead sleep in somebody else's home. Options range from sleeping on someone's sofa for a nominal fee to hiring entire mansions for weekend getaways for thousands of pounds per night.
Originally, AirBNB was popularised by the younger generations who were in search of an unusual or cheaper place to lay their head. Now, however, AirBNB users come from all walks of life; attracted by the flexibility the arrangement has to offer. Jersey is not immune; estimates place growth in the number of AirBNBs listed on Jersey between 2015 and 2019 at around 800%.
Hotels, bed and breakfasts and lodging houses have historically been closely regulated, but the previously unheard of concept of an AirBNB has not been accounted for in legislation. So quick has the rise in popularity been that regulating authorities around the world have been scrambling to adapt. However, legislation to administer the operation of very short term lets has not been forthcoming. In the absence of such regulation, the issues associated with listing a property as an AirBNB derive from an unusual intersection of laws built for other purposes.
1. Planning - holiday accommodation must be registered with the States and must comply with a hefty number of conditions (extending even to the provision of cooking utensils in self-catering accommodation). AirBNBs generally avoid the need to register as they are primarily residential dwelling houses which are let "on occasion".
Maybe surprisingly in Jersey's tightly controlled residential licensing system, the current framework means that there are no licences or registrations required to sub-let a property to five or fewer people. Nevertheless, the owners of a property which has been used as a dwelling house in the past, but which is now objectively used as an AirBNB, could find themselves required to register with the States.
2. Tax – tax is a complicated topic and tax implications will very much depend on the individual's circumstances. Whilst pocketing an occasional fee may seem relatively innocuous, receipts from short term lets is likely to be classed as income and therefore subject to income tax, which will of course need to be accounted for.
3. Tenant's breach – the vast majority of residential leases in Jersey will prohibit the sub-letting or sharing of occupation of the property with any person not a party to the tenancy agreement. The tenant's legal obligation to abide by their lease operates independently from planning and taxation law. A tenant who breaches the provisions of the lease may find themselves in hot water with their landlord.
The rising cost of housing in Jersey has been well documented. For many islanders, a supplement to the cost of their mortgage or their rent is a tempting prospect. The ease with which one can list AirBNB availability is not however in keeping with the legal complications that could ensue.
Visit Jersey has ramped up its ambitions and, having seen a 3% increase in 2018 on the previous year, is now targeting one million visitors to the island by 2030. Those visitors (whether for business or leisure) will need to be housed and will expect flexible accommodation to suit.
It is likely that the Government of Jersey will move to regulate short term lets provided by AirBNB in the not too distant future but in the meantime, those listing their properties should be aware of the potential for legal complications that arise.
Related Service: Property