Can I Rent My Flat On Airbnb?
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Can I Rent My Flat On Airbnb?

If you have a spare room or second property, then you might have considered renting it out through Airbnb or similar sites. It’s a popular platform designed to allow you to let rooms or whole apartments to those looking for a short-term stay. Homeowners list their property on the website with photos, house rules and of course – a price, holidaymakers can then browse properties and message homeowners to negotiate or book. It might seem like a low hassle way of renting your extra space, as well as a great way to make extra money, as people typically pay more per night for short-term rentals than long-term, and it gives some flexibility if you want the house empty on particular dates. However, if you own a leasehold flat you could be at risk of breaching your lease.

Private Residence, What Does It Mean?

One individual, who owned a leasehold flat in Enfield which she frequently let through Airbnb and other rental sites, was sued for breaching the terms of her lease. Neighbours in the block complained to the freehold owner, who then issued court proceedings.

The lease contained several covenants which are commonly found in residential leases, and prevented her from using the property or permitting it to be used for any purpose whatsoever other than as a private residence, and doing or permitting to be done any act or thing in or upon the property which may be or grow to be a damage, nuisance or annoyance to the lessor or any of the occupiers of any neighbouring or adjoining properties.

The defendant argued that as she paid bills and rents relating to the property, it was still her main residence even though she let it out for short periods. Unfortunately for her, the Court decided that she was breaching the terms of her lease by letting out the property in these short-term rentals.

It was also argued that the property was still a ‘private residence’ for the person staying at that time. However, the duration of the lets was considered relevant; the defendant usually rented the flat for a few days a week, either to holidaymakers or businesspeople needing a place to stay in the city. The Judge felt that this type of renting was more similar to booking a hotel room rather than guests taking on the flat as their own short-term private residence. The ruling meant that for a property to be classed as the owners private residence,  ‘there must be a degree of permanence going beyond being there for a few nights at a time’. The Court stressed that each individual case would depend on the duration of the lets as well as the wording in lease.

What other clauses might affect you?

  • A clause which prohibits you from causing or permitting a nuisance. If your lease states that you are not allowed to play loud music or cause a disturbance, then that clause extends to any guests you allow in the property as well. You mustn’t permit any visitors who cause a nuisance and as the leaseholder, you’ll be held responsible if the freeholder brings a claim against you. When allowing strangers to stay in your home this could be a risk, as even if you put in your house rules that no loud music is allowed, not all guests will respect this.
  • A clause which restricts subletting of the whole or part of the property unless by way of an Assured Shorthold Tenancy agreement. You will want to be sure that the form of agreement your guests enter into does not fall foul of this provision. This wording therefore effectively restricts the term for a rental to a minimum of six months, meaning short-term lets are a problem.
  • A clause stating that the property must not be used for business or trade. Arguably, short term lets which generate an income could constitute a business and so may be restricted by the lease. In addition, if you change the use of your property without planning permission, you can face a hefty fine so check with your local authority before you start letting.

Although you may think that you could avoid being found out, breaching any of your lease terms could have serious and far reaching consequences. The freeholder may issue legal proceedings against you and ultimately, they could decide to seek forfeiture of your lease. This means that they would reclaim possession and your lease would be ended. Naturally, this would lead to a significant litigious issue both for you and any mortgage lender who has secured a charge against the subject property.

Your mortgage

In addition to the above, most mortgage offers are subject to certain clauses and conditions which would explain which forms of lets are permitted regardless of what the lease states. You must ensure you fully understand what these are before committing to the mortgage or the property itself. In many cases, you will need to tell your mortgage lender that you wish to use the property as a short-term rental, but there is no guarantee that they will agree to this. If you do it anyway without their consent, you could be in breach of your mortgage and may even face proceedings to have the flat repossessed or have to repay the loan in full.

Insurance

In leasehold properties it is mostly the responsibility of the leaseholder to take out insurance on the inside of the property and its contents, while the Landlord will insure the building as a whole. While Airbnb itself does offer some form of insurance, it also expressly states that this doesn’t cover everything. It is therefore crucial that you check there are no restrictions set out either on your landlord’s (or your) insurance policy which would invalidate it, by letting your property on Airbnb.

Health and safety

You are governed by the same regulations which rules standard landlords, even if you let your property on a short term basis through Airbnb. These are mostly health and safety laws. There are very varied obligations, which include items such as ensuring that each floor of the property has a smoke alarm and a carbon monoxide alarm fitted and in working order at all times, as well as ensuring that all safety certificates for the gas and electric are up to date and satisfactory, and ensuring that the boiler and water ways work correctly and are regularly tested. You must therefore check that your flat complies with all health and safety laws before you can begin letting it out, even if it’s only for a few nights.

So, the morale of the story is that you should check your lease and its terms carefully, before letting your property with Airbnb or a similar style let. Review any restrictions on use and what consent you might need to obtain and be sure to speak to a solicitor or licensed conveyancer so that they can read through your lease and help you understand exactly what you can and cannot do with your property.

Disclaimer – our articles are designed to give you guidance and information.  There is no substitute for proper direct advice, particularly as everyone’s circumstances are different.  If anything in this article may affect you, please contact us for advice that is specific to your circumstances.

 

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