Tuesday 25 June 2019

Make sure you're a permanent resident if you want to avoid getting stuck with a hefty tax bill for running a business

Photo: Getty
Photo: Getty
Deirdre Conroy

Deirdre Conroy

Airbnb, the online short-term holiday rental platform, is aimed at tourists who want to 'experience a city like a local' and is ideal for home-owners who could do with a bit of extra cash.

No wonder then, that an apartment in Temple Bar, the mecca of hens and stags in the heart of Dublin's 'cultural quarter', was yielding almost €80,000 per year for one owner. Only, according to Dublin City Council and An Bord Pleanála, that scale of business would require planning permission for material change of use.

This week, the Board upheld a declaration by Dublin City Council that the extensive year-round, short-term letting constituted a material change of use and was not exempted development. Consequently, the owner would have to apply for permission to the local authority to continue his commercial use.

The owner had argued in his submission to the Board that the use was still residential and, as such, was not restricted according to the original planning permission. Had he not advertised the apartment for sale as an 'investment property', seeking double the market value of the adjoining apartments, his neighbours might not have had the opportunity to seek a declaration from Dublin City Council on the change of use.

Temple Bar Residents, chaired by Frank McDonald, were fed up with the comings and goings in the four-storey block, where there are only five apartments.

They made a Section 5 referral to Dublin City Council earlier this year and cited evidence of anti-social and criminal behaviour as one of the many problems being experienced by the other occupants of the building. Everyday issues with security and the fully commercial nature of the activity is bound to affect the enjoyment of other residents in such a small building, but it remains to be seen, if you own a barn or a light house in the middle of nowhere, whether you need to apply for change of use for year-round, short-term lettings.

As well as using the apartment for year-round, short-term holiday lettings, the Board took into account the absence of any occupation of the apartment, or any portion of the apartment, by any permanent resident.

This is how this case differs from your average home-owner who is renting a room or indulging in the slightly more lucrative Airbnb package - being a permanent resident in your own property is key to maintaining its residential classification. That way, your neighbours can be sure there won't be late night party-goers teetering around the common areas and stair wells, knocking on the wrong doors, singing their way home.

Prior to the Board's ruling, in a prescient action, a property management company at Spencer Dock had sent a letter last week to almost 2,000 residents of one of Ireland's biggest developments with over 600 apartments, telling them to stop using their apartments for short-term lets. The letter outlined that the activity was contrary to their residential and tenancy agreements.

The Spencer Dock management company cited the problem was not so much with individual owners, but that property companies were sub-letting at a premium on Airbnb.

Since the Board's ruling, management companies will be able to extend a ban on serial short-term lettings.

Ultimately, the popularity of Airbnb, particularly in Dublin City Centre, is a direct consequence of the shortage of hotel beds and high cost of hotel accommodation. In Berlin, the popularity had risen to such an extreme, contributing to a housing shortage and spiking rents, that a law was introduced against the commercial short-term letting of apartments to tourists, without a city permit.

Wasting no time, when the actual Airbnb Inc. made Dublin its Europe headquarters, one State authority was swift in taking action. The Revenue Commissioners have no doubt benefited hugely from the indigenous hospitality of the Irish, making all that income from your bedroom, highly taxable.

The Board's ruling is specific to this particular apartment scenario. The traditional Irish approach to bed and breakfast remains exempt from planning permission providing there are no more than four bedrooms on offer and no more than four people in each bedroom and, of course, that you remain on site to serve up the Full Irish.

Irish Independent

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