If your investment property is empty for a short period of time, you may have thought about recouping some of the lost rental income by advertising it on Airbnb. It might be an attractive idea, but the first question to ask yourself is: are you actually allowed to do it?
Your Buy to Let mortgage almost certainly prohibits Airbnb
Be aware that under the terms of a standard Buy to Let mortgage, the property must be let on a 6-month minimum contract - lenders are unlikely to permit you to rent it out on a short-term basis.
And if you’re tempted to go ahead and list your property on Airbnb without first speaking to your lender, don’t. These days, they are very wise to the ways in which some landlords break the rules (even by accident) and have teams making online checks for breaches of mortgage conditions. If they find out, you may be asked to repay your mortgage in full and you would have to disclose the breach on any future mortgage applications, making it much harder to get new financing.
A small number of lenders will allow landlords to rent out rooms for short periods of time and some have already begun to consider Airbnb in the same bracket as holiday lets, however:
- Some of these mortgages are only available in certain areas of the UK
- You will usually be required to already own at least one Buy to Let – and some lenders require a minimum of three
- The rental income will be assessed as if the property were a traditional rental on a standard Assured Shorthold Tenancy, i.e. much lower than the potential income from short-term lets
- The LTV will almost certainly be a maximum of 75%
Check your insurance
Insurers have different attitudes towards sub-letting. Because of the greatly increased risk in letting to a third party for a very short period of time, some won’t insure you at all and those that will are going to charge a significantly higher premium.
Airbnb does offer its own insurance and it’s worth speaking to an independent broker to make sure you get the most appropriate cover.
Note: Be aware that if you let to a tenant on an Assured Shorthold Tenancy and they sub-let a room via Airbnb, that could invalidate your landlord insurance, not to mention breach the terms of your mortgage!
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
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The Reeds Rains Content Marketing Team
