You are a tenant, or a landlord, and you realise that you can make more money out of subletting or renting out your property on Airbnb than you are paying in rent or receiving from longer term tenancies of 6 or 12 months. What a great idea! Well think again… 

The Risks As A Landlord

Mortgaged Property 

Most mortgages include a clause preventing any letting without prior consent and lenders would either say no or may consider granting consent subject to the payment of a fee. So, should you proceed anyway?  

It is understandably appealing to either not approach your lender for consent or to go ahead anyway, even if they refuse. After all, how can they find out? They can and do. 

Lenders monitor such websites and can carry out checks to see if properties are advertised on Airbnb and other sites. If you apply for a re-mortgage these checks are much more likely to be carried out. Lenders may also be able to identify Airbnb income from bank statements. 

In the event that you don’t request consent and they do find out they could demand a substantial one off fee or increase your mortgage rate. They could even call in your loan, seeking immediate repayment of your mortgage.

The fact is letting your property without your lenders consent is a significant risk which may not be worth taking on a cost benefit analysis.

Insurance 

You could invalidate your insurance policy if you let your property using Airbnb and don’t inform your insurer. Using Airbnb changes your policy risk profile and the insurer could use it as a reason to reject any claim.

Health and Safety 

If you let the property as a landlord, you would be obliged to comply with health and safety laws, just as you would if you were letting it on a regular 6 or 12 month tenancy.

Damage to the Property 

This is a very real risk and one that can cause you a headache, especially if the damage isn’t covered by the limited Airbnb host guarantee or you have not told your insurer about your use of Airbnb.

Guests Refusing To Leave 

You can change the locks at the end of the term without a court order, as it is a holiday let. However, it is a criminal offence to use or threaten to use force to evict the guests and therefore you should think carefully before doing so. The prudent method is to issue a claim for possession and get a possession order, although this will be at a cost and will delay your re-letting of the property for at least 3 months.

The Risks As A Tenant

Lease Terms 

Aside from it being dishonest to do so, your lease will probably include terms that prohibit you subletting your rented property or only permitting you to doing so with your landlord’s written consent. It might also prevent you using the property for the purpose of a holiday letting. 

If so, any breach may lead to forfeiture action being taken by your landlord which ultimately could lead to you losing your property and having to pay a hefty costs bill or face your credit rating being irreparably damaged by having a judgment registered against your name.

Insurance 

You must make sure that your insurance is not invalidated by subletting your property on Airbnb.

Damage to the Property 

You will be liable to your landlord for any damage caused to the property by your Airbnb guests and this could mean to you losing some or all of your deposit.

Health and Safety 

If you are a leaseholder with a long lease, and decide to let the property as holiday accommodation, the health and safety laws would apply to you as you would be considered to be a landlord under the law. For instance, you would have to comply with the relevant fire regulations and in due course have installed smoke alarms and carbon monoxide alarms.

Change of Use 

Recent case law means that even if your lease does allow you to sub-let your property the use of Airbnb may be deemed a breach of any clause in your lease which restricts the use of the property as a private residence only or prohibits carrying out any business in the premises.

Nuisance 

As a leaseholder you could be in breach of your lease if your guests are causing noise in the property, and the freeholder, or any of the other leaseholders can bring a claim against you. It has been held that by permitting Airbnb guests to use the property, and those guests, either having parties or the leaseholder permitting them to do so, the leaseholder would be responsible, as if he were hosting those parties himself. 

If you need any advice in relation to renting your property, please do not hesitate to contact call us on 01133 50 40 30 or at hello@scesolicitors.co.uk

If you enjoyed this article and would like to be kept updated, please subscribe to our monthly newsletter.

SCE Solicitors is a boutique employment law and dispute resolution practice based in Leeds which advises clients nationwide. Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

No Comments

Add a Comment

LATEST LEGAL UPDATES:

  • Can You Make An Employee On Maternity Leave Redundant?

    Tags: Redundancy, Maternity Leave, Redundancy Pay, Notice Pay, Employment Law, Employment Tribunal, Statutory Maternity Pay, Pregnancy and Maternity Discrimination

    Employees on maternity leave have special legal rights and protections and so before making such employees redundant you must tread very carefully and be aware of the following five things. Otherwise you could risk facing a costly claim.

    Genuine Redundancy Situation

    You must be able to prove that there is a genuine need to reduce your headcount. If the real reason you want to dismiss your employee is because she has had a baby or is on maternity leave, you will be discriminating against her and could face a discrimination claim.  So, you must have evidence to prove why you need to make redundancies.

    Fair Selection Process

    You must choose who you are going to select for redundancy fairly and reasonably. This means you must choose a reasonable selection pool and apply fair, … more

    

Reviews and Ratings for solicitor Samira Cakali, Leeds