Whether you're considering becoming a host or already have a short-term rental in Inverness, understanding the local regulations is vital for a successful hosting experience.

Please note, the information in this post was recently updated in July 2023. Since regulations tend to change quite often, do consult a specialist before setting up an Airbnb in Inverness.

State of the Short-Term Rentals Market:

Before diving into the regulations, let's take a glance at the current state of Inverness's short-term rentals market.

According to Airbtcs, a leading platform for vacation rental data, Inverness experiences a healthy demand for short-term accommodations. There are 1133 listings available in the area. The nightly rate remains competitive at £107, allowing hosts to earn a decent income. The average occupancy rate of 43% reflects the city's popularity as a holiday destination, and the average revenue generated from short-term rentals - £1,306 per month, presents a promising opportunity for prospective hosts.

Investing in a Short-Term Rental in Inverness:

If you're considering investing in a short-term rental property in Inverness, now is a great time to do so. However, before taking the leap, it's crucial to familiarize yourself with the regulations that govern hosting in the city. By understanding and complying with these regulations, you can ensure a smooth and successful hosting experience. In the following sections, we will outline the key regulations that you need to know as a host in Inverness.

Inverness, like the rest of Scotland, has seen changes in its regulations regarding short-term rentals. Click here to read about them on the Highland Council website. The Scottish Government introduced legislation that requires local authorities to establish a licensing scheme for short-term lets by 1 October 2022. This legislation aims to ensure the safety of short-term rentals, address concerns raised by neighbors, and help local authorities gain a better understanding of the impact in their respective areas.

The introduction of a licensing scheme and potential control areas for short-term lets is part of a broader effort to strike a balance between the economic and tourism benefits of hosting and the needs and concerns of local communities. It reflects the government's intention to manage the rapid growth of the short-term rental market and ensure responsible hosting practices.

Screen from a start of the application for the license on the Highland Council

At present, hosts in Inverness do not need to provide evidence of planning permission as part of their application for a short-term rental license. However, it's important to note that properties located in Badenoch and Strathspey may have additional planning requirements if this area becomes designated as a Short-Term Let Control Area. It's advisable to stay updated on any developments and consult with local authorities to ensure compliance with all relevant regulations.

Taxes on Short-Term Property Rentals in Inverness:

Council Tax:

If you're providing short-term rental stays in Inverness, it's important to be aware of the council tax obligations associated with your property. In most cases, hosts are required to pay council tax on their property, even if they are eligible for a reduction or exemption. Council tax is a local tax imposed by the local authority, and it helps fund various public services in the area. It's crucial to check with the local council to understand the specific council tax requirements and rates that apply to your property.

Exemption for Business Rates:

While council tax is generally applicable to short-term rental properties, there may be exemptions available if you are liable for business rates. Business rates are a tax levied on non-domestic properties used for commercial purposes. If your short-term rental property is considered to be primarily for business purposes, you may be exempt from council tax and subject to business rates instead. However, it's essential to consult with the local council and seek professional advice to determine your specific tax obligations based on the nature of your rental activity.

Tax-Free Allowance:

In the United Kingdom, there is a tax-free allowance for income generated from letting out accommodation in your home, which is often referred to as the "Rent a Room" scheme. As of now, you are allowed to earn up to £7,500 annually tax-free from letting out accommodation in your primary residence. This allowance applies to short-term rentals where you are sharing your home with guests. If you are renting out a second home or a property that is not your primary residence, the regular rental income tax rules will apply.

To get detailed information about the Rent a Room scheme, visit the government's official website or consult with a tax professional who can provide guidance tailored to your specific circumstances. Staying informed about tax regulations and ensuring compliance will help you manage your short-term rental income effectively while meeting your tax obligations in Inverness.

Note: Tax laws and regulations can change over time, so it's always important to verify the most up-to-date information from official sources or consult with a tax professional.

Tax-Free Allowances for Short-Term Accommodation in Inverness:

As a host on Airbnb in the UK, you may be eligible for a tax-free allowance on the income earned from your hosting activities in Inverness. It's important to note that tax regulations can change, so always verify the most up-to-date information from official sources or consult with a tax professional. Currently, there is a tax-free allowance known as the Micro-Entrepreneurs allowance, which allows hosts to earn up to £1,000 annually tax-free.

However, it's important to be aware that if you claim the £1,000 tax-free allowance, you cannot simultaneously claim Rent-a-Room relief on the same income. Rent-a-Room relief is a separate tax relief that allows individuals to earn up to £7,500 tax-free annually from letting out furnished accommodation in their primary residence. Therefore, you will need to assess which tax relief option is more beneficial for your specific circumstances.

Should I Pay Business Rates on My Short-Term Property in Inverness?

The requirement to pay business rates on short-term rental properties in Inverness depends on the number of days you rent it out. In general, properties that are available for self-catering rental for 140 days or more in England, Scotland, or Wales are considered business-rate properties by the government.

If your short-term rental property in Inverness meets this threshold, you may be liable to pay business rates. The specific amount will be determined based on factors such as the type and size of your property, its location, and the maximum number of guests it can accommodate. It's worth noting that guest houses or bed-and-breakfasts that have the capacity to host more than six people at a time may also be subject to business rates.

To determine whether your property falls under the business rates category and to get an accurate assessment of your potential obligations, it's recommended to consult with the local council or a tax professional who can provide you with specific guidance based on your property's characteristics and rental activity.

Have you heard about KeyNest?

If you're a landlord or host in Inverness and you're looking for a convenient and time-saving solution for key management and check-ins, KeyNest Points service is the perfect option for you.

By using KeyNest, you can securely drop off your keys at any of our 4,000 points, typically located in local stores or cafes. This allows your guests, cleaners, or contractors to easily retrieve the keys when needed. Each time the key is picked up or returned, you will receive a notification, giving you peace of mind and ensuring a smooth key-handling process.

To make the check-in and check-out process even more convenient, you have the flexibility to set custom times according to your preferences. This ensures that the key is available for pick-up precisely when your guests arrive and can be conveniently returned after their stay.

In Inverness, we have an extensive network of KeyNest Points, conveniently located just a few minutes away from your property. This means that you can enjoy the benefits of efficient key management without having to travel long distances.

Discover how KeyNest can simplify your key management and enhance your hosting experience in Inverness by visiting our website at https://keynest.com/. With KeyNest Points, you can save time, reduce costs, and ensure a seamless check-in process for your guests.

Airbnb host guide: Regulations in Inverness