Derry, Ireland Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Derry, Ireland?

Short-term rentals like Airbnb and VRBO have become increasingly popular in Derry and across Ireland in recent years. However, there are a number of regulations and requirements that hosts need to be aware of before listing their property. This article covers the key rules for starting a short-term rental business in Derry.

Starting a Short-Term Rental Business in Derry

Before listing your property on Airbnb, VRBO, or other short-term rental sites in Derry, there are several important steps to take:

• Check the zoning laws in your area to ensure short-term rentals are allowed. In Derry, short-term lets may require "change of use" planning permission, even if no structural changes are made to the property. Contact the Derry City and Strabane District Council planning department for guidance.
• If your property is part of a homeowners association (HOA), review the HOA rules. Some HOAs prohibit short-term rentals entirely or have restrictions on the number of guests or minimum rental periods.
• Register your short-term rental business. Like hotels, short-term rentals in Ireland must register with local authorities, collect occupancy taxes from guests, and remit those taxes to the proper agencies. Failure to do so can result in penalties.
• Obtain any required licenses and permits. These commonly include a general business license and a specific short-term rental license or permit. A short-term rental permit in Derry typically requires a home inspection and annual fee.
• Ensure your property meets health and safety standards. Short-term rentals need adequate fire safety measures like extinguishers and smoke alarms. You may also need to notify adjacent neighbors of your intent to operate a short-term let.

The Irish government has proposed new legislation to further regulate short-term rentals. Under the Short-Term Tourism Letting Bill, properties rented for more than 21 days per year would need to register with Fáilte Ireland. Fáilte Ireland could also levy fines up to €5,000 against unregistered rentals. As of July 2023, this bill is still pending approval from the European Commission.

For the most current and complete information on short-term rental regulations in Derry, consult with the planning and building control departments of the Derry City and Strabane District Council. An experienced local attorney can also provide guidance on the legal requirements and implications for your specific circumstances.

With the proper planning, registration, and adherence to local rules, operating a short-term rental business in Derry can be a profitable venture. The key is treating it like a true business from the start, with a well-defined strategy, detailed financial tracking, and a focus on creating an outstanding guest experience.

Short-Term Rental Licensing Requirements in Derry

In addition to registering as a landlord, hosts offering short-term rentals in Derry must obtain a specific short-term rental license or permit from the Derry City and Strabane District Council. The key requirements include:

1. Completing a short-term letting license application form, available from the Council's Building Control department
2. Paying the license application fee of £100 for properties with up to 4 bedrooms, or £150 for 5+ bedroom properties
3. Providing a floor plan of the property, drawn to scale
4. Ensuring the property meets all health and safety standards, including adequate smoke and carbon monoxide detectors, fire extinguishers, and clearly marked fire escape routes
5. Notifying adjacent property owners of your intent to operate a short-term rental
6. Designating a local contact person, such as a property manager or co-host, who can respond to any issues at the property within 1 hour
7. Maintaining a register with details of all guests
8. Ensuring guests do not cause noise or disturbance to neighbors, especially between 11pm-7am
9. Limiting guest numbers based on the property's maximum occupancy
10. Providing one off-street parking space per two bedrooms

Once you submit the completed application form, floor plan, and license fee to the Council's Building Control department, an inspector will arrange a property visit to ensure compliance with health and safety requirements. The licensing process typically takes 2-4 weeks from submission to approval.

Failure to obtain the required short-term rental license can result in fines of up to £2,500. The Council also has the authority to issue enforcement notices requiring the cessation of short-term letting activity for non-compliant properties. Continued non-compliance can lead to prosecution and further penalties.

To ensure a smooth licensing process, carefully review all requirements, properly prepare your property, and submit thorough documentation to the Council. An experienced short-term rental management company can assist with licensing and help ensure ongoing compliance.

Required Documents for Derry Short-Term Rentals

To legally operate a short-term rental in Derry, you will need to obtain the following documents:

1. Tourism Northern Ireland (NI) Certificate - Under tourism legislation, it is illegal to offer tourist accommodation in Northern Ireland without a certificate from Tourism NI. This involves an inspection of the property every 4 years to ensure it meets minimum standards. Apply for certification on the Tourism NI website, pay the fee, and submit any required documentation. The certification process typically takes 2-4 weeks.
2. Planning Permission for Change of Use - In Derry, short-term lets may require "change of use" planning permission from the Derry City and Strabane District Council, even if no structural changes are made. Contact the Council's planning department to determine if permission is needed for your property. If so, submit the planning application form, fee, floor plans, and other required documents. Planning approval can take 8-12 weeks.
3. Fire Safety Inspection Report - All short-term rentals in Derry must meet fire safety requirements, including adequate smoke and carbon monoxide detectors, fire extinguishers, and clearly marked escape routes. Premises accommodating more than 6 people require an annual fire safety inspection from the Northern Ireland Fire & Rescue Service. Contact them to schedule the inspection and obtain the report needed for licensing.
4. Proof of Neighbor Notification - Before applying for a short-term rental license, you must notify adjacent property owners of your intent to use the property for short-term lets. This can be done via a standard letter or email. Keep copies of the notifications to submit with your license application as proof.
5. Short-Term Letting License Application - Once you have obtained the Tourism NI certificate, planning permission, fire safety report, and notified neighbors, complete the short-term letting license application form from the Derry City and Strabane District Council Building Control department. Submit the form, £100-150 fee, and copies of the above documents. The Council will then arrange an inspection to verify compliance before issuing the license, which can take 2-4 weeks.

Keep all of these documents on file and readily accessible, as the Council can request them at any time to verify your short-term rental is operating legally. The Tourism NI certificate and short-term letting license must also be clearly displayed inside the rental property itself.

Failing to obtain and maintain these required documents can result in significant fines and legal issues. But by carefully following the steps above, you can ensure your Derry short-term rental is fully licensed, certified, and compliant with all local regulations.

Derry Short-Term Rental Taxes

When operating a short-term rental in Derry, there are two main types of taxes to be aware of: income tax and Value Added Tax (VAT). Properly accounting for and paying these taxes is a key responsibility for hosts.

Income Tax

Income earned from short-term rentals in Ireland is taxable, but it is not considered rental income. Instead, it is taxed as either:

1. Trading income (Schedule D) if you are operating as an ongoing business, like a bed and breakfast
2. "Other income" if the short-term rental income is only occasional

If classified as trading income, it is taxed at your marginal rate, which ranges from 20-40% depending on your tax bracket. If classified as "other income", it is taxed at your marginal rate plus an additional 3% Universal Social Charge (USC).

You must declare short-term rental income annually by filing either a Form 11 (for self-employed individuals) or Form 12 (for PAYE employees with additional income). The forms are due by 31 October for the preceding tax year.

Deductions

You can deduct certain expenses from your short-term rental income to reduce your tax liability. Allowable deductions may include:

1. Mortgage interest (trading income only)
2. Advertising and platform fees (e.g. Airbnb commissions)
3. Cleaning and laundry costs
4. Food provided to guests
5. Utility costs directly associated with guest usage
6. Depreciation of furniture and fixtures at a 12.5% rate over 8 years (trading income only)

Be sure to keep detailed records and receipts for all claimed expenses in case of an audit. Consult with a qualified tax professional to ensure you are claiming all eligible deductions.

Value Added Tax (VAT)

If your short-term rental income exceeds €37,500 per year, you may need to register for and charge VAT. The VAT rate for holiday accommodations is 13.5%.

Once registered for VAT, you must add 13.5% to your rental prices, collect the VAT from guests, and remit it to the Revenue Commissioners bimonthly. On the positive side, you can also reclaim VAT on eligible expenses like electricity, gas, and property repairs.

Given the complexity of VAT regulations, it's best to consult with an experienced tax advisor if you believe you may need to register.

Other Taxes & Fees

Depending on your specific circumstances, other taxes or fees may apply, such as:

1. Local Property Tax (LPT) - 0.18% on properties up to €1 million
2. Nightly tourist tax collected by Airbnb - €2 per night for entire home rentals, €0.50 per night for private rooms

By understanding your tax obligations, keeping good records, and enlisting the help of professionals as needed, you can ensure your Derry short-term rental business stays compliant and avoids costly penalties. Build these costs into your financial plans and pricing strategy to maintain profitability.

Ireland-Wide Short-Term Rental Rules

In addition to Derry-specific requirements, short-term rental hosts in the city must also comply with national laws and regulations set by the Irish government. The key national rules include:

Planning Permission

Under regulations introduced in July 2019, if your property is located in a Rent Pressure Zone (RPZ), you likely need planning permission to use it for short-term lets. This applies if you:

1. Rent out a second property that is not your principal private residence for short-term lets
2. Rent out your entire principal private residence for more than 90 days per year for short-term lets

In these cases, you must apply for a "change of use" planning permission from your local council. It's unlikely permission will be granted in high housing demand areas.

You are exempt from planning permission if your property is outside an RPZ, is a registered holiday home, is used for long-term corporate rentals, or is purpose-built student accommodation. You can also rent your primary residence for up to 90 days per year without permission.

Registration Requirements

A new national registration system for short-term rentals is being developed by Fáilte Ireland, the national tourism development authority. Once launched in late 2024, any property rented short-term for 21 nights or less per year will need to be registered.

This applies to rooms in your own home, entire properties, and multi-unit rentals like holiday villages. After registering, you'll receive a registration number that must be displayed on all advertisements and booking platforms. Platforms like Airbnb will only be able to list properties with valid registration numbers.

Failing to register properties used for short-term letting can result in fines up to €5,000.

Taxation

Income earned from short-term rentals is subject to income tax. If classified as trading income from an ongoing business, it's taxed at 20-40% depending on your tax bracket. If classified as supplemental "other income", it's taxed at your marginal rate plus a 3% Universal Social Charge.

You must declare short-term rental income annually on your tax return. Certain expenses like mortgage interest, cleaning fees, and food provided to guests can be deducted. If your annual turnover exceeds €37,500, you may need to charge a 13.5% VAT to guests.

Other Regulations

Other national rules and taxes that may apply to your short-term rental:

1. Properties must meet fire safety and building standards
2. If your property accommodates more than 4 people, it requires a fire safety certificate
3. Short-term rentals are subject to the €2 per night tourist tax collected by booking platforms
4. If your rental is part of a multi-unit development, the lease or building rules may prohibit short-term letting

By understanding and complying with these national regulations, as well as local Derry rules, you can operate your short-term rental legally and successfully. Consult with local authorities and qualified tax and legal professionals to ensure you meet all obligations.

Does Derry Strictly Enforce STR Rules?

Based on discussions in online forums like Reddit, Derry appears to take a relatively relaxed approach to enforcing short-term rental regulations compared to other cities in Ireland and the UK. While Derry does have rules on the books requiring STR operators to register, obtain permission, and follow certain standards, active enforcement seems limited.

Several Redditors report operating Airbnbs in Derry without significant issues or pushback from authorities. One host mentioned running multiple STR properties on different lots in the city. Others said the registration and licensing process was fairly straightforward.

This tracks with the experience in many other cities - the rapid rise of Airbnb and other STR platforms has outpaced the ability of local governments to stringently monitor and police short-term rentals. Officials may lack the resources and mechanisms to identify unregistered STRs and bring them into compliance.

However, this doesn't mean Derry is a free-for-all for short-term rentals. The city council is actively working to strengthen its STR ordinance and oversight. Hosts still face potential fines and legal issues if they blatantly violate the rules, especially if their rentals generate complaints from neighbors.

Compared to larger cities like Dublin, though, Derry seems to be more Airbnb-friendly overall. The lower cost of real estate, ample tourism draw, and relatively lighter hand from regulators makes Derry an appealing market for STR operators.

Of course, hosts should still do their due diligence, carefully review all requirements, and make every effort to comply. But in practice, many are operating STRs in Derry despite not being fully above board. As the city refines its approach to short-term rentals, this dynamic could change. For now, Derry remains a rather permissive environment for Airbnb and other STR platforms.

How to Start a Short-Term Rental Business in Derry

Starting a short-term rental business in Derry can be a rewarding venture. Here's a step-by-step guide to help you get started:

Research local regulations and obtain necessary permits

Before listing your property, thoroughly review Derry's short-term rental rules. Key requirements include registering with Tourism NI, obtaining planning permission for change of use if located in a Rent Pressure Zone, notifying adjacent neighbors, designating a local contact person, and meeting health and safety standards. Apply for a short-term letting license from the Derry City and Strabane District Council, which involves an inspection. Failing to secure proper permits can result in substantial fines.

Prepare your property for guests

Ensure your rental is clean, well-maintained, and equipped with essential amenities. Hire a professional photographer to take high-quality photos for your listing. Install smart locks for easy guest access. Stock the property with ample linens, toiletries, kitchenware, and other items guests expect. Consider unique features or amenities that will make your property stand out, like a welcome basket or local guidebook.

Choose a pricing and marketing strategy

Research short-term rental rates for comparable properties in your area to determine competitive nightly prices. Factor in additional costs like cleaning fees, occupancy taxes, and platform commissions. Consider implementing dynamic pricing that fluctuates based on demand. List your property on popular booking sites like Airbnb and VRBO. Craft an enticing listing description that highlights your rental's best features and local attractions.

Automate your operations

Managing a short-term rental involves many moving parts - bookings, guest communication, cleaning, maintenance, etc. Use vacation rental software to streamline these processes. Channel managers can sync calendars and rates across multiple booking sites. Automated guest messaging tools handle common questions and send key details. Scheduling platforms coordinate cleanings between stays. By automating repetitive tasks, you can provide a seamless experience for guests while saving significant time.

Provide excellent customer service

Delivering top-notch hospitality is key to earning positive reviews that drive future bookings. Respond promptly to all guest inquiries, both pre-stay and during their visit. Provide clear check-in instructions and property information. Be available to answer questions or troubleshoot issues that arise. Go above and beyond with thoughtful touches like local snacks or personalized recommendations. After check-out, thank guests for their stay and kindly remind them to leave a review.

Comply with tax obligations

Short-term rental income is subject to income tax and potentially VAT in Ireland. Consult with a qualified tax professional to determine which rules apply to your situation. Maintain detailed records of all rental revenue and expenses. Issue an annual tax return declaring your earnings and deductions. If liable for VAT, register accordingly, add it to your rates, and file bimonthly returns. Properly accounting for taxes from the start will avoid headaches down the road.

By following these steps and continually optimizing your strategy, you can launch and grow a successful short-term rental business in Derry. While it requires dedication and hard work, the potential rewards - both financial and personal - make it a worthwhile venture for many hosts. With Derry's increasing popularity as a tourist destination, now is an opportune time to enter the market and start welcoming guests to your rental.

Who to Contact in Derry about Short-Term Rental Regulations and Zoning?

If you have questions about short-term rental rules, permits, or zoning in Derry, reach out to these key contacts and resources:

Derry City and Strabane District Council

The local council oversees planning permission, building control, and short-term letting licenses in Derry. Contact their offices for guidance on STR requirements and applications.

1. Derry Office:
   98 Strand Road, BT48 7NN
   Phone: (028) 71253 253
2. Strabane Office:
   47 Derry Rd, Strabane, Tyrone BT82 8DY
   Phone: (028) 71253 253

Planning Department

For questions specifically related to planning permission and change of use for short-term rentals, contact the Council's Planning Department:

Phone: 0300-200-7830 or 028 71253 253

Building Control

The Building Control department handles inspections and approvals related to health and safety standards for short-term rental properties. Reach out to them for fire safety and habitability requirements.

Phone: (028) 71253 253

Tourism NI

Tourism NI administers the certification process for tourist accommodations in Northern Ireland, including short-term holiday lets. Contact them for questions about the certification application and inspections.

Phone: (028) 9023 1221

Online Resources

These websites offer helpful information and guidance for short-term rental operators in Derry and across Ireland:

• Derry City and Strabane District Council's guide to the private rented sector, including short-term lets: https://www.derrystrabane.com/services/health-communitywellbeing/private-rented-sector
• Tourism NI's overview of legal considerations for tourist accommodations, including planning permission and building regulations: https://www.tourismni.com/business-guidance/sector/accommodation/legal-considerations/planning-and-building-control/

Host Communities

Connect with other local hosts and stay up-to-date on short-term rental regulations in Ireland through these groups and forums:

• Airbnb Community Center groups for hosts in Ireland: https://community.withairbnb.com/t5/Ireland/ct-p/Ireland
• Irish Airbnb Host Alliance (IAHA) - A group of short-term rental hosts advocating for fair and reasonable STR regulations across Ireland: https://saveourstrs.ie

By contacting the appropriate authorities and utilizing these resources, you can get the information and support needed to ensure your Derry short-term rental is operating in compliance with all local rules and regulations. The Council's staff are generally very helpful in guiding hosts through the registration and licensing process.

What Do Airbnb Hosts in Derry on Reddit and Bigger Pockets Think about Local Regulations?

Scanning through threads on Reddit and Bigger Pockets, there are a range of opinions from Derry Airbnb hosts regarding the city's short-term rental regulations. Here are some key takeaways:

Lack of Clarity and Enforcement

Several hosts express frustration with the ambiguity of Derry's STR rules and the inconsistent enforcement. In a Reddit thread titled "Operating an Airbnb in Derry - what are the actual rules?", one host vented:

"I've been running an Airbnb in the city center for over a year now and still don't have a clear answer on what permits I actually need. I've reached out to the Council multiple times but get conflicting information. Some say I need planning permission and a special license, others say I'm fine as long as I'm paying taxes. Meanwhile, I know there are dozens of other unregistered Airbnbs operating without any apparent issues. The lack of clarity and enforcement is beyond frustrating."

Concerns Over Restrictions

Other hosts worry that Derry will follow the lead of cities like Dublin in cracking down more severely on short-term rentals. In a Bigger Pockets discussion on "The future of STRs in your local market", a Derry host wrote:

"I'm nervous Derry is going to go the way of Dublin and other major cities in heavily restricting Airbnbs to only primary residences or imposing night limits. That would completely upend my business model of operating multiple full-time STR units. I understand the need to balance tourism with housing needs, but blanket bans aren't the answer. Hopefully Derry takes a more nuanced approach and works with responsible hosts."

Importance of Being Above Board

However, other hosts stress the importance of dotting your i's and crossing your t's when it comes to regulations, even if enforcement is spotty. A Reddit user shared their experience:

"When I started my Airbnb, I made sure to get all the proper planning permissions and licenses squared away with the Council. Yes, it was a bit of a headache, but it gives me peace of mind knowing I'm fully compliant. I've heard horror stories of hosts being slapped with huge fines for operating illegally. It's not worth the risk in my opinion. Follow the rules from the get-go."

Impact on Housing and Communities

There are also differing takes on the degree to which short-term rentals are impacting Derry's housing market and local communities. In response to an article about Airbnb driving up rents, one host pushed back:

"The notion that Airbnb is singlehandedly causing Derry's housing woes is overblown. We still have a very small percentage of listings compared to the overall rental stock. The bigger issue is the lack of new housing development. Scapegoating Airbnb hosts overlooks the root problems."

But others acknowledge the need for reasonable restrictions to prevent Airbnbs from overrunning certain neighborhoods. A Bigger Pockets user reflected:

"I can see both sides. I operate Airbnbs but I also wouldn't want my street to turn into a revolving door of transient guests. There has to be a balance. I think a cap on the number of STR licenses in saturated areas and good-neighbor policies for hosts could help strike that balance in Derry."

So in summary, hosts hold a spectrum of views - some lamenting the ambiguity and burden of regulations, others recognizing the need for sensible rules. But most seem to agree that any restrictions should be clear, consistently enforced, and strike a middle ground that allows responsible hosting to continue. The Council will need to work with hosts to craft STR policies that address key issues without overly stifling the industry.

Disclaimer: While we here at BNBCalc strive to keep all of our city regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each city and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.