The New Reality for PMCs (Why 2025 Is Different)
Running short‑term rentals has transformed. Once, it was enough to list a property on Airbnb and manage keys. Today, property management companies (PMCs) face an entirely new set of risks:
DAC7 reporting: every booking is automatically reported to HMRC.
Planning rules: England is introducing a national register and a new use class (C5) for short-term lets; the London 90-day cap is now enforced.
Rates exposure: property risk switching from council tax to business rates.
VAT complexity: Serviced accommodation is treated similarly to hotels; VAT depends on whether you act as an agent or principal.
Client Money Protection (CMP): If you hold client funds, regulators and owners expect segregation and certification.
Platform risk: payout holds, chargebacks, fraud reviews.
This creates both opportunity and liability. Owners still hold income tax liability, but PMCs carry operational, reputational, and financial risk. Without a resilient finance model and contracts aligned to tax law, the business model is fragile.
The 10 Biggest Pain Points PMCs Report — and Fixes
For property management companies (PMCs), the last few years have been a whirlwind of growth, regulation, and frustration. While demand for short‑term rentals continues to rise, the operational and financial complexity has multiplied. Below we unpack the ten biggest challenges PMCs consistently report — and offer structured, practical fixes. Each sub‑section blends real industry complaints with workable solutions, positioning CIGMA as a trusted partner for operators who want to professionalise and scale.
2.1 OTA payout holds and chargebacks
One of the most common pain points reported in PMC forums is delayed payouts. Airbnb and Booking.com may hold funds for several days or weeks if a host is new, an account is flagged, or a chargeback is initiated. This causes severe cash flow disruption, especially when cleaners and contractors expect immediate payment. Chargebacks, often triggered by fraud or guest dissatisfaction, leave PMCs liable for costs they cannot always recover.
Fix: Build a working capital buffer to cover at least one month of operating costs, diversify into direct bookings through your own website to reduce OTA dependency, and use segregated client money accounts so owner funds are protected and transparent. Proper bookkeeping services help ensure timely reconciliation. See our Bookkeeping Services London for more.
2.2 Owner statements and trust accounting
Owners demand clarity. Yet gross bookings, cleaning charges, OTA commissions, and VAT rarely reconcile neatly. Without clear owner statements, PMCs face disputes, mistrust, and potential client churn.
Fix: Adopt PMS software with trust accounting functionality. Integrate it with Xero or QuickBooks to automate the reconciliation process. Regular audits of owner statements reduce disputes. At CIGMA, our Company Accounts Service London can help configure these systems properly.
2.3 VAT traps
VAT is a minefield. Misclassifying your role as principal instead of agent can mean VAT applies to the gross booking value rather than just your management fee. This simple error can result in substantial, unexpected VAT bills.
Fix: Clarify the operating model in contracts, configure the PMS correctly, and review VAT quarterly to ensure compliance. Our VAT Services London provide tailored reviews to ensure compliance.
2.4 London 90‑day rule and planning
Exceeding the 90‑day annual limit for short‑term lets in Greater London can trigger planning enforcement and fines. Many PMCs struggle to track bookings across multiple platforms.
Fix: Configure PMS calendars to automatically cap nights at 90. Provide quarterly compliance reports to owners. Our HMRC Compliance Investigations team also advises on tax exposures related to planning.
2.5 Business rates vs council tax
Sudden reclassification of a property from council tax to business rates by the Valuation Office Agency (VOA) can drastically increase costs. Owners rarely expect this, leaving PMCs to handle the fallout.
Fix: Track availability and model potential impact at onboarding, then clearly inform owners. Refer to the Landlord’s Accounts for more structured planning.
2.6 CMP expectations
Client Money Protection (CMP) is increasingly non‑negotiable. Without it, professional landlords hesitate to sign contracts, fearing their funds may not be secure.
Fix: Join an approved CMP scheme, ring‑fence client money in dedicated accounts, and display certificates on your website and contracts. This reassurance is vital for trust. Learn more from the CMP Schemes Guidance.
2.7 Insurance and guest damage
Disputes over who covers accidental damage or liability claims are frequent. Airbnb’s AirCover is limited, leaving gaps.
Fix: Require specialist short‑term rental insurance for owners. Allocate liability clearly in contracts. Ensure evidence procedures (photos, reports) are in place. Our International Tax Planning in London also covers cross‑border insurance deductibility.
2.8 Contractor churn
High turnover among cleaners or maintenance contractors disrupts service quality. Poor cleaning or late maintenance damages review scores, hurting revenues.
Fix: Maintain a roster of vetted suppliers, set service level agreements (SLAs), use checklists, and require photo proof of work. Payroll Services London may also help streamline payments for employed staff.
2.9 Multi‑channel reconciliation
Airbnb, Booking.com, Stripe, and direct booking engines all send payouts differently. Without central reconciliation, errors accumulate and disputes emerge.
Fix: Use the PMS as the “single source of truth.” Create clearing accounts for each OTA in Xero/QuickBooks. Automate payout matching. CIGMA supports such setups through Year-End Accounts London reviews.
2.10 Contracts vs operations mismatch
When contracts specify one fee structure but PMS software applies another, disputes are inevitable. Mismatches in cleaning charges, VAT application, or commission percentages undermine credibility.
Fix: Rewrite contracts so that legal, financial, and operational processes align. Ensure software reflects what is written. Our Self Assessment Tax Return Services and advisory teams can draft alignment guides.
“Owner Money Flow — where it breaks” showing OTA payout ➝ PMC account ➝ deductions ➝ owner net payout.
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Building a Resilient Finance Stack
For a property management company, finance is the backbone. Without a resilient finance stack, even the best operations crumble under payment delays, VAT errors, and owner disputes. A strong system ensures not only compliance but also credibility in the eyes of landlords and regulators. Let’s break down the three critical pillars — PMS, accounting, and cash management — and then map a practical sprint to implementation.
PMS (Property Management System)
Your PMS should not just handle bookings — it must be the financial nerve centre of your business. Essential features include:
Trust accounting: every property and every owner needs a separate ledger. Money belonging to owners should never be confused with the PMC’s operating cash.
Owner portals: transparent statements and dashboards build confidence. An owner should be able to log in and see their bookings, deductions, and payouts clearly.
Reconciliation rules: OTA payouts often don’t align perfectly with reservations. A good PMS will automatically reconcile payments, fees, and cancellations.
Integration is non‑negotiable. The PMS should be connected directly to Xero or QuickBooks. Manual exports and spreadsheets are error‑prone, consume staff hours, and erode credibility. A connected system enables daily syncs, resulting in faster month-end reconciliation and fewer disputes.
Accounting System
Once data flows into the accounting platform, the setup must be tailored to STR operations. A generic chart of accounts is inadequate. We recommend:
Control accounts for client money: segregating funds that belong to owners.
Clearing accounts for each OTA: Airbnb, Booking.com, and Stripe each need their own clearing account to capture timing differences.
Revenue by channel: Segmenting revenue provides insights into dependency on OTAs versus direct bookings.
VAT codes for agency vs principal models: avoiding misclassification is critical. If you are an agent, VAT applies only to your fee; if you are a principal, VAT may apply to your gross income.
With this structure, reconciliation becomes easier, financial reports are meaningful, and VAT filings are accurate. Our VAT Services London and Year-End Accounts London provide reviews to ensure accounts remain compliant.
Payment & Cash Management
Even with the right PMS and accounting, poor cash management can sink a PMC. Focus on:
Segregated client accounts are essential for CMP compliance and maintaining owner trust. Never mix client money with business operations.
13‑week rolling cashflow forecasts: visibility is power. This horizon helps identify when OTA payout delays or seasonal dips will hurt liquidity.
Policies for chargebacks/refunds: without a documented approach, disputes drain reserves. Decide who absorbs costs and when.
Minimum float requirements: Establish rules for owner floats to cover long stays or high‑risk bookings.
Together, these measures ensure that cash is available when needed, and owners are never left waiting for funds due to internal shortages.
Implementation Sprint
Building this stack can seem daunting, but with a structured sprint, it becomes manageable:
Bank setup: open designated client and operational accounts.
Chart of accounts: configure Xero/QuickBooks with STR‑specific categories.
PMS trust configuration: ensure owner ledgers and reconciliation are active.
Owner statement templates: standardise presentation to avoid confusion.
VAT model: Clarify the distinction between agency and principal and configure codes accordingly.
Contract annexe: align agreements with financial flows to prevent mismatches.
This sprint can be completed in 30 days with the right guidance. The payoff is immense: fewer disputes, faster reporting, stronger compliance, and scalable growth. CIGMA specialises in guiding PMCs through this journey, turning financial chaos into a competitive advantage.
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Compliance Cheat‑Sheet for PMCs
Compliance is not just about ticking boxes; it is about protecting your business model, satisfying regulators, and reassuring owners that their investment is being managed professionally. The short-term rental industry is evolving rapidly, and property management companies that overlook compliance often find themselves facing penalties, angry landlords, or even legal action. Below is a deeper look at the main areas of compliance that every PMC must prioritise, expanded into a clear 500‑word roadmap.
DAC7: Aligning PMS/OTA Data with Owner Statements
Since January 2024, platforms such as Airbnb and Booking.com have been required to report booking data directly to HMRC under DAC7. If your PMS or owner statements do not match these reported figures, expect questions from both owners and HMRC. Even small discrepancies can trigger a compliance review. PMCs should implement reconciliation procedures so that OTA data aligns with owner payouts, management fees, and VAT treatment. Our HMRC Compliance Investigations service supports companies when HMRC issues queries.
Planning: London 90‑Day Rule and National Registration
Planning is a growing challenge. The London 90-day rule means that properties cannot be rented short-term for more than 90 nights a year without consent. Beyond London, the government is introducing a national register and the new C5 use class for short‑term lets. PMCs must track bookings against these limits, apply exemptions properly, and keep owners informed. Failure to do so risks not only fines but also reputational damage. Our Landlord’s Accounts and International Tax Planning teams in London help model planning and tax impacts together.
Rates: Forecasting Council Tax vs Business Rates
The Valuation Office Agency (VOA) can reclassify a property from council tax to business rates if it meets self‑catering thresholds. This reclassification dramatically changes cost structures and often surprises owners. PMCs should forecast potential exposure during onboarding, clearly explain scenarios, and maintain records of leave days. By proactively planning, you avoid difficult conversations later. For deeper analysis, explore our Company Accounts Service in London.
VAT: Clarifying Agency vs Principal and Monitoring Thresholds
VAT compliance is one of the trickiest areas. If your business model is as an agent, VAT applies only to your fee. If you are treated as principal, VAT can apply to the gross booking value, which can be catastrophic if not priced correctly. Furthermore, all PMCs must monitor the £90,000 VAT registration threshold. Regular reviews of contracts, PMS configurations, and turnover are vital. Our VAT Services London ensure that your business model aligns with HMRC expectations.
CMP: Protecting Client Money
Owners trust you with their income, and regulators expect that money to be segregated and accounted for. Joining a Client Money Protection (CMP) scheme, holding funds in designated accounts, and displaying certificates are no longer optional — they are essential for credibility. Without CMP, many landlords will not sign agreements. Our Bookkeeping Services London can set up segregated ledgers and controls that support CMP compliance.
Safety: Meeting Legal Obligations
Short‑term rentals must meet basic health and safety standards. This includes smoke and carbon monoxide alarms, fire risk assessments, and adequate insurance cover. Too many PMCs leave safety compliance entirely to owners, but regulators expect professional oversight. Establish a checklist at onboarding, store digital copies of certificates, and schedule renewal reminders. Our Year End Accounts London reviews can incorporate safety audits as part of wider compliance checks.
“20‑Point PMC Compliance Checklist” — a visual tool showing DAC7, Planning, Rates, VAT, CMP, and Safety alongside key owner/manager responsibilities.
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What Peers Are Complaining About (Industry Pain Points)
The short‑term rental sector is still young, and property management companies (PMCs) often feel like they are building the plane while flying it. Across industry forums, trade shows, and even consumer press, a handful of common frustrations emerge repeatedly. Expanding on these insights gives us a deeper understanding of the real-world challenges that PMCs face — and how a structured financial and compliance framework can help.
Payout delays and unpredictability
Perhaps the most consistent complaint concerns payout delays. Airbnb, Booking.com, and other OTAs hold funds for compliance checks, fraud reviews, or simply due to processing backlogs. For PMCs, this creates cash flow headaches when staff and contractors still expect immediate payment. It also undermines trust with owners, who may not understand why their income is being held.
Fix: Build a financial buffer and explain payout timelines during onboarding. Adopt direct booking channels to reduce dependency on OTAs. Our Bookkeeping Services London team helps PMCs model cash flows to absorb payout delays.
Lack of a single source of truth
PMCs often juggle payouts from Airbnb, Booking.com, VRBO, and Stripe. Without a single system of record, it is nearly impossible to reconcile accounts. Generic PMS tools struggle with trust accounting, leaving managers to rely on spreadsheets and guesswork.
Fix: Establish the PMS as the source of truth. Integrate it with Xero or QuickBooks to automate reconciliation. We support these integrations through the Company Accounts Service in London.
Trust accounting is too difficult
Many PMCs complain that trust accounting is either impossible or far too complex within generic systems. Without it, they risk mixing owner funds with business money — a red flag for both landlords and regulators.
Fix: Configure PMS software with trust accounting functionality, and run quarterly reconciliations. Our Landlord’s Accounts service helps structure owner-ledgers clearly.
VAT confusion: agent vs principal
Uncertainty over whether a PMC is acting as agent or principal causes sleepless nights. If treated as principal, VAT may apply to gross bookings instead of just commission — massively inflating liability. Many PMCs have discovered this only after HMRC reviews have taken place.
Fix: Review contracts, lock in the VAT model, and configure PMS accordingly. Regular VAT health checks from our VAT Services London prevent costly surprises.
Moving regulatory targets
Operators are frustrated by shifting rules — from the London 90‑day cap to the incoming national register and C5 planning class. Because changes are frequent, many PMCs feel they are constantly playing catch‑up.
Fix: Maintain a compliance tracker, issue quarterly owner updates, and factor regulatory changes into contracts. Our HMRC Compliance Investigations team provides guidance when rules tighten.
Insurance gaps
Airbnb’s AirCover is limited, and Booking.com offers even less. PMCs report disputes over guest damage, liability claims, and even fraudulent bookings, with owners often assuming the PMC should cover the costs.
Fix: Require owners to purchase specialist STR insurance. Store policy documents, allocate liability in contracts, and educate owners about coverage limits. Our International Tax Planning London can also advise on the deductibility of premiums.
Complaints about industry immaturity
Beyond specific rules, PMCs often complain that the industry feels immature: inconsistent software, unclear legal frameworks, and fragmented contractor bases. This immaturity makes it hard to scale without robust systems.
Fix: Professionalisation is the answer. Document SOPs, build strong supplier rosters, and align contracts with financial processes. Our Year-End Accounts London reviews give operators the structured oversight they need to appear professional to investors and landlords alike.
Summary
Across payout delays, VAT traps, planning headaches, and insurance gaps, one theme emerges: PMCs crave clarity and structure. By adopting integrated finance stacks, trust accounting, VAT reviews, and compliance trackers, managers can transform complaints into competitive advantages. At CIGMA, we specialise in providing that clarity — turning frustration into opportunity for property managers who want to grow.
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Owner Comms That Keeps You Out of Trouble
Strong owner communication is the hallmark of a professional property management company. Misunderstandings about income, fees, or compliance obligations can quickly escalate into disputes, legal claims, or churn. By contrast, PMCs who provide clear, proactive, and structured communication retain owners longer and reduce reputational risk. Below, we expand this section into a complete guide with practical steps, suggested templates, and links to supportive services.
Essential documents
Onboarding pack: This should outline the planning and rates status of each property, clarify whether the operation falls under council tax or business rates, set out the VAT model (agent vs principal), and detail the expected payout timetable. Including a cash flow forecast in the onboarding pack reassures owners that the PMC has considered liquidity issues. Our Cashflow Forecasting Services are particularly relevant here.
Monthly owner statement: Owners should receive a transparent list of reservations, fees deducted, cleaning charges, VAT treatment, and the final net payout. When integrated with trust accounting, these statements become a powerful tool for building trust. We support this through our Landlord’s Accounts and Bookkeeping Services in London.
Quarterly regulation update: Regulations change frequently, from the London 90-day cap to the new national STR register. Sending a one-pager summarising changes shows professionalism and avoids nasty surprises for owners. This can link with our HMRC Compliance Investigations and International Tax Planning in London.
SLAs & KPIs: Document service level agreements for cleaning and maintenance, including defect rates, contractor response times, and guest review scores. Owners appreciate measurable standards. Our Payroll Services London can also help standardise contracts with in-house staff.
Communication best practices
Consistency over volume: Monthly is the minimum cadence for financial updates. Quarterly is appropriate for regulatory updates. Avoid overwhelming owners with fragmented information.
Transparency in money flows: Always explain deductions clearly. Use visual infographics in statements where possible.
Education as prevention: Many disputes arise from owner misunderstanding of VAT or planning rules. Use updates to educate, not just inform.
Digital portals: Owner dashboards accessible via PMS portals reduce support emails and give owners control.
Why this matters
When communication is unclear, owners often assume the worst: hidden fees, mismanagement, or even fraud. In a competitive market, that leads to churn. By contrast, proactive communication not only avoids disputes but also generates referrals. Happy owners will recommend PMCs who treat them as informed partners rather than passive investors.
Our Company Accounts Service London and Year End Accounts London reviews can embed these communication practices into financial workflows, ensuring the numbers always align with what owners see. Additionally, our Cashflow Forecasting and Self-Assessment Tax Return Services facilitate alignment between personal and business obligations.
Tools to streamline communication
PMS owner portals with document storage.
Automated email triggers for monthly statements.
Shared dashboards using business intelligence tools.
Templates for regulatory one-pagers.
Conclusion
Owner communication is not a soft skill — it is a hard requirement for compliance, retention, and profitability. By delivering clear onboarding packs, regular statements, regulation updates, and KPI reporting, PMCs reduce disputes and increase loyalty. CIGMA supports this process end-to-end, including bookkeeping, accounts, VAT reviews, cash flow forecasting, and compliance audits. Investing in structured communication is ultimately investing in the resilience and growth of the business.
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FAQs for Property Management Companies
Who declares Airbnb income?
In almost all cases, owners are responsible for declaring rental income from Airbnb and similar platforms. The PMC declares only their management commission and any directly charged service income. It is essential to communicate this distinction clearly to owners, so they understand their Self-Assessment Tax Return Services obligations. PMCs should provide owners with annual statements summarising gross bookings, deductions, and payouts to support accurate declarations.
Do PMCs need VAT registration?
Yes, if the PMC’s turnover exceeds the £90,000 VAT registration threshold, they must register for VAT. This typically includes management fees and, potentially, cleaning services charged to owners. The complexity arises in determining whether the PMC is acting as an agent or a principal. If an agent, VAT applies only to the management fee. If a principal, VAT may apply to gross bookings — a much bigger liability. Regular checks with our VAT Services London prevent expensive errors.
Do we need Client Money Protection (CMP)?
If the PMC holds client funds, CMP is essential. CMP schemes protect landlords if funds are misused or lost. Many owners now demand proof of CMP before signing contracts. Without it, you risk losing new business. Our Bookkeeping Services London can set up segregated accounts that support CMP compliance and streamline reconciliations.
What’s the London 90‑day rule?
In Greater London, properties can only be rented out short‑term for a maximum of 90 nights per year without planning consent. Exceeding this limit can trigger enforcement action. PMCs should configure PMS calendars to block bookings once 90 nights are reached automatically. CIGMA’s HMRC Compliance Investigations team advises on planning‑linked financial exposures.
Business rates or council tax?
Whether a property is liable for council tax or business rates depends on its level of availability and the actual number of letting days. The Valuation Office Agency (VOA) decides the classification. If rated as self‑catering, business rates apply, often at a higher cost. PMCs should forecast this risk during onboarding and keep records of usage. Our Company Accounts Service in London and Landlords’ Accounts help model different scenarios.
Best accounting and PMS software?
PMCs need software that supports trust accounting, owner statements, and integration with mainstream accounting systems. A PMS with built‑in financial rules, linked to Xero or QuickBooks, creates a reliable source of truth. Avoid relying solely on spreadsheets. Our Company Accounts Service in London configures these integrations, and our Cash Flow Forecasting Services ensure the system supports effective liquidity planning.
How should PMCs handle chargebacks or guest disputes?
Chargebacks and disputes can erode margins. PMCs should have a documented policy detailing who absorbs the cost and under what circumstances. Guest communication, photo evidence, and signed agreements are crucial. Including a chargeback clause in owner contracts protects the PMC. Our Business Advisory Services London can draft practical templates.
What are common HMRC triggers for investigations?
Discrepancies between OTA‑reported income under DAC7 and owner tax returns are a significant trigger. Other red flags include undeclared VAT, inconsistent expense claims, and a lack of CMP certification. PMCs can reduce risk by aligning PMS, contracts, and owner statements. Our HMRC Compliance Investigations and Self Assessment Tax Return Services provide defence and disclosure support.
How often should PMCs provide financial reports to owners?
Monthly is the standard for financial statements, while regulatory updates may be quarterly. Some PMCs add mid‑month updates for high‑volume portfolios. Consistency matters more than frequency. Automated reports via PMS portals cut admin while boosting transparency. Our Year-End Accounts London audits can ensure owner reporting is accurate and aligned.
Can overseas owners claim double tax relief?
Yes, in many cases. If owners are tax residents abroad, UK income may be subject to Double Tax Treaties, which prevent double taxation. PMCs managing overseas owners should flag this early. Our Understanding Double Tax Treaties and International Tax Planning services in London provide tailored advice for non-resident landlords.
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How CIGMA Helps PMCs Scale
Choosing the right accountant is the difference between surviving and scaling in the short‑term rental sector. At CIGMA Accounting, we specialise in helping Airbnb property management companies (PMCs) develop compliance, cash flow stability, and long-term growth strategies. Unlike generic accountants, we understand the unique challenges of OTA payout delays, DAC7 reporting, VAT traps, and owner trust accounting. Our services are specifically designed for the fast-moving serviced accommodation and holiday let market.
Here’s how we help PMCs grow
Design PMC finance stacks that integrate property management systems with accounting software for a seamless flow of data.
Configure PMS trust accounting and owner statements, ensuring landlords receive transparent, accurate reports.
Integrate with Xero or QuickBooks, setting up STR‑specific charts of accounts and clearing accounts for OTAs.
Run VAT reviews to avoid costly agent vs principal misclassifications and monitor the £90k registration threshold
Audit rates and planning risks, including council tax vs business rates and the London 90‑day cap
Align DAC7 reporting with HMRC disclosure, reducing the risk of investigations.
Support Client Money Protection (CMP) compliance by establishing segregated client accounts and controls.
Provide cashflow forecasting and business advisory services, helping PMCs maintain liquidity and plan for expansion.
By partnering with CIGMA, PMCs gain more than an accountant — they gain a strategic ally who understands the property management industry. Our team works across London locations, including Wimbledon, Farringdon, Sutton, and Canary Wharf, supporting both start‑up managers and established operators. We help clients eliminate penalties, streamline reporting, and secure the confidence of investors and landlords.
Book a free strategy call with a specialist Airbnb and short‑term rental accountant today. Discover how CIGMA can help you optimise compliance, strengthen cashflow, and scale sustainably in a sector where precision and trust make all the difference.
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