What is the 90 day rule on Airbnb?

If you're an American who owns a property in London, you may consider renting it out via Airbnb to generate some passive income. That's a good idea, but London property owners face a big restriction: the 90-day rule.

This regulation caps "entire home" listings in Greater London at just 90 days per year.

If you're thinking of getting into short-term rentals in London, it's essential to understand this rule and how it works. Here's what it means for your property, why it was created in the first place, and potential ways to work around this restriction.

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What is the Airbnb 90-day rule on Airbnb?

The 90-day rule restricts entire home listings in Greater London to a maximum of 90 occupied nights per calendar year.

This means that you can't rent your property for more than 90 nights per year, whether it's consecutive nights or spread throughout the year.

When you reach the 90-day threshold, Airbnb automatically blocks new bookings for your property until January 1st of the following year.

This restriction only applies to "entire home" listings where guests have exclusive access to the property. Private rooms within your home, if you also live there, aren't subject to this limitation.

Why was the Airbnb 90-day rule introduced in London?

The 90-day rule isn't something that Airbnb created. This limit comes from an old housing law, the Greater London Council (General Powers) Act 1973. Back then, London banned all short-term rentals under 90 days to keep homes available for people who live there.

When Airbnb started getting popular, this old law meant nobody could do short-term rentals. However, the government realized that short-term rentals could help homeowners make money and boost the local economy.

So, they approved the Deregulation Act 2015, letting property owners rent their homes for up to 90 nights per year without getting special permission from the council.

This way, homeowners can earn short-term rental income, but properties won't turn into full-time tourist rentals and stay available for long-term residents.

Pros & cons of the 90-day rule on Airbnb

Pros

The 90-day limit helps keep London's housing market more stable and accessible to long-term residents.

Without it, landlords might convert thousands of homes into full-time Airbnb rentals, which would reduce the number of places available for locals to rent at an affordable price.

The rule also prevents overcrowding in popular areas. When entire buildings turn into short-term rentals, it can create noise problems and strain local services like garbage collection and parking.

Cons

Naturally, property owners miss out on a large chunk of the property's income potential. A prime London property could easily earn much more than what's possible in 90 days, especially during peak tourist seasons.

With fewer short-term rental options available, tourists may also choose other cities where accommodation is more plentiful and affordable. This means less money flowing to local restaurants and shops. Overall, some people argue that it's too rigid.

Can you bypass the 90-day limit on Airbnb in London?

However, you can still make money from your property through other legal rental strategies. One of the most popular things to do is use your 90 Airbnb days during peak tourist seasons, and then switch to medium or long-term rentals for the remaining months.

Corporate professionals, digital nomads, or people temporarily relocating to London all need housing for 3, 6, or 9 months with good furnishings and stable Wi-Fi. Renting to them is a great way to earn an income from your property, even when the 90 days are up.

How does the 90-day rule impact the overall rental market in London?

On the one hand, the 90-day rule keeps more properties available for people who live and work in London. This prevents entire neighborhoods from becoming tourist-only areas and pushing long-term residents out.

However, it also means that there's less flexibility for property owners. If you don't want your property to sit empty for 275 days every year, you'll need to figure out a way to attract medium or long-term rentals. Alternatively, some landlords ditch short-term rentals altogether and focus on long-term tenants only.

For tourists, this means that there are fewer short-term rental options, and they come with higher prices. Some people may choose to stay at a hotel instead.

Overall, London still has a strong real estate market, and there are ways to make money on Airbnb, off Airbnb, and by combining Airbnb with other rental strategies. There are also property management firms that can help you maximize your property's rental income potential.

Now, here's a problem that many property owners overlook.

If you own property in London but live in the US, you're likely moving money between the two countries regularly. Bank transfers are notoriously expensive because of high fees and currency exchange rate markups.

If you need to send money often, you'll likely lose thousands of USD over time.

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Sources

1. HOUST - Explaining London’s 90-Day Airbnb Rule