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To Airbnb or not to Airbnb

To Airbnb or not to Airbnb? What are the risks for property owners?

With the summer holiday season in full swing, are you tempted to rent out your home through Airbnb or a similar short-term letting service to earn some extra income while you are away?

If so, you need to be aware of the potential legal risks involved, particularly if your home is a leasehold property.

If you would like further advice, please contact Rebecca Prince (Residential Conveyancing Property) or Susan Harrison (Commercial Property) on 01243 792102.

Risk 1: Breaching the terms of your mortgage

The majority of lenders prohibit a homeowner from renting out their property without obtaining the lender’s prior consent, and some lenders will not allow short-term lettings at all. If you do not get consent from your lender, you risk breaching the terms of your mortgage agreement and this can have serious consequences including payment of additional fees or costs, an increased mortgage rate, immediate repayment of the mortgage or even repossession.

It is therefore vital that you examine your mortgage agreement before you rent out your home.

Risk 2: Breaching the terms of your lease

If you are looking to rent out a leasehold property, then you should carefully review your lease before doing so. Many leases will not allow the use of a property for short-term lettings.

A court recently held that letting a property out on Airbnb amounted to a breach of the terms of the lease. The court held that the letting amounted to a subletting or licence which was not permitted under the terms of the lease and, additionally, that there was a further breach of the lease as the property was not being used on a residential basis, but rather for commercial use as it was being rented out on a short-term basis to paying customers.

The terms of the lease in question were standard terms found in most residential leases, which means that it is likely that a high proportion of Airbnb lettings will be in breach of the homeowner’s lease.

Therefore, if you are considering letting out your flat, you should read your lease carefully to check if it has similar clauses, because if there are such clauses then you could potentially be in breach of your lease. The landlord of your property could take costly legal action against you including, in some circumstances, taking the lease back from you so you would no longer own the property.

Risk 3: Planning restrictions

A further issue to consider is planning restrictions within your local authority. Some local authorities have restrictions that state that the use of residential premises for temporary accommodation will be considered as a ‘change of use’, for which planning permission is required.

You should therefore check with your local authority to ensure that you are not breaching planning restrictions before you let your property.