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Home > News > Homes into Short-Term Lets – The importance of checking the small print

Homes into Short-Term Lets – The importance of checking the small print

04 June 2021 | Julian Pyrke

As lockdown restrictions continue to ease, with many shops and bars now open for business and the possibility of summer holidays lingers in the air, many property owners may be considering cashing in on the increase in demand for “staycations” in the UK.

Many landlords and property owners are now offering up their homes for short-term lets via Airbnb due to the higher rental returns they offer. Although, whether it is your main property, rental property, or ‘holiday home’ it is important to check how and where you stand before posting an advert of Airbnb, HomeAway or any other short-term letting sites. It is important to check the small print, as posting an advert may affect your mortgage, your lease, your tax returns, property insurance, and may even require planning permission.

If your property has its own mortgage, as most do, you may be subjected to terms that usually prevent renting out your home without permission from the lender. It is often simple to gain permission to let out your property should you be intending to return at some point, such as you have been sent away for work for a year, many lenders will not accept short-term or holiday lettings.

If you own a leasehold property, then the lease may contain restrictions that can affect your plans. Lease covenants have been put to the test in the courts in recent years and in 2018 a court decided that Airbnb lettings represented short-term commercial hire for paying guests. This breached covenants requiring the property to be used as a residential flat and occupied by one family only, so the owner was blocked from offering short term lettings.  

Julian Pyrke, Head of Commercial Property commented: “The terms that were breached were the sorts that are found as standard in most long-term residential leases. If you breach such terms, it’s likely to lead to legal action being taken by the freeholder. Even if you don’t check out what the lease says, or decide not to ask the freeholder for permission, it’s very likely that another resident will pick up on what is happening and raise the alarm.” 

Another issue that may arise, is whether the letting is in breach of any local planning regulations, as some local authorities require a change of use to be approved where a residential property is being turned over to temporary accommodation.

Recently, Oxford saw the first successful action by a local authority to ban the use of a property for short lets without planning permission.  The City Council issued a planning enforcement notice against the owner following complaints of antisocial behaviour and nuisance arising from guests.  The Planning Inspectorate ruled in favour of the council, meaning that without planning approval for a material change of use the owner can no longer let the property on Airbnb.

Should you be able to overcome those hurdles, it is important to ensure that your tax affairs are in order and that you have the right insurances in place. Airbnb have agreed to share data with HMRC in relation to the rental incomes of their hosts. If you receive over £1,000 a year by letting out your second home/property, or more than £7,500 for your main home, you must declare your rental income to the HMRC. The data being shared by Airbnb is likely to lead to many homeowners being targeted for non-compliance.

Additionally, if your property is being let your insurance may be affected. There may be a need to get specialist insurances to cover the liability of guests being injured on the property, or to protect against possible loss of income due to unforeseeable events, a factor that has been in the forefront of many owners minds over the past year due to the impact of the coronavirus pandemic.

Contact our Commercial Property solicitors in Bristol or London

If you are a property owner who is considering short-term lets and is looking for expert legal advice, our Commercial Property solicitors can advise on a wide range of issues.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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