Making More From Spare Space!
Airbnb has become the first choice for many looking for overnight accommodation or longer with the appeal that they will be sharing someone’s home. The success of Airbnb has been exponential. For the host, it’s a simple way of earning some extra cash, either on an occasional basis or longer, by simply posting your property details on to their website, but there can be a downside.
A recent case has highlighted a problem. Owners renting out their flats may be doing so unwittingly in breach of their leases. In a recent court case concerning a flat in London, it was decided a clause in the lease stipulating the flat should only be used as a ‘private residence’ could not be rented out for short periods.
Although every flat lease varies slightly most contain some form of words restricting the use of the flat ‘as a private residence’. Often these words are tied in with others such as ‘shall be used in the occupation of one family only’. Press reports of the case suggest that the outcome has a ‘huge significance’ for flat owners, but in reality has the law actually changed?
Inviting visitors to share your home while you are living there is one thing but renting out your whole flat for short periods when you are not there becomes a business and so may well be prohibited. Is this unusual to Airbnb? No, not at all. It is simply restating the existing law.
This has special relevance to the Isle of Wight with its many second homes. A block of flats with its planning and freeholder imposed limitations is intended to provide a home with air of permanence. It does not imply nor intended to be used as short term holiday lets. Many a freeholder turns a ‘blind eye’ to such breaches, but for some it can easily be a source of friction. If you are buying a flat with the intention of using it for holiday lets then you must tell your lawyer so the lease can be checked and prior permission obtained from the freeholder before you commit yourself. Check the lease carefully!
The lease may not be the only problem. The Council for Mortgage Lenders has reportedly said that hosts offering short term lets without lender’s consent may be in breach of their mortgage conditions and may possibly take action.
You could also be jeopardising the landlord’s building insurance cover if the insurers are not informed of the business use.
As a last word, remember you may not be safe if you own a freehold house. Such properties, particularly estate properties, have restrictive covenants intended for the benefit of all the other estate owners. These may well restrict the property to a private residence only to accord with the planning permission and not to use for a business. In short if you are going to do it, then it should be on the basis you are still living there and have not moved out.
Paul Wilks & Co Ltd, Specialist Property Lawyers, 3 Garfield Road, Ryde, PO33 2PS