Letting your home on Airbnb - does your mortgage lender give permission?

HappyMJ

silvercar wrote: »

Very grey area. Allegedly people living near Wimbledon have been doing it for years, though possibly not through airbnb.

I would think that mortgage lenders are happy to turn a blind eye when the people occupying the property are not given any rights to remain that an AST would provide ie as long as it doesn't become their main home and therefore subject to tenancy laws rather than contract law. Insurers would need to be informed and may charge a premium or decide not to offer cover for damage caused by paying guests.

Assuming the lender will turn a blind eye isn't exactly the right way to go about renting your house out properly.

What gives an occupier rights? If the airbnb guest decides to stay on how do you get the guest out? When do they become a tenant and not a guest or a lodger?

That's what I mean about the insurance if they decide not to cover for damage by paying guests and they burn the place down then you have no house and a mortgage that still needs paying.

I would assume the OP would need a BTL mortgage but that sort of mortgage only covers paying tenants who have AST's.

Is there a mortgage product that allows short term rentals?

G_M

HappyMJ wrote: »

Is there a mortgage product that allows short term rentals?

I don't know, but surely this equates to holiday lets?

There are holiday homes let out short-term all over the country so there must be mortgage and insurance products to support these businesses.

Thrugelmir

ReadingTim wrote: »

I suspect both their mortgage company and the taxman are in the dark about their Airbnb activities....

Airbnb will be requested to provide detailed information to the HMRC at some point in time. Be foolish to think that the tax authorities don't have teams that work on specific projects. Particularly where they know they cannot fail to be recover undeclared tax. Then there's the fines, penalties and interest on top. Plus the likelihood that some individuals other sources of previously undeclared income. The HRMC now use a system called Connect. Through which they can even see the type of car you own.

silvercar

Thrugelmir wrote: »

Airbnb will be requested to provide detailed information to the HMRC at some point in time. Be foolish to think that the tax authorities don't have teams that work on specific projects. Particularly where they know they cannot fail to be recover undeclared tax. Then there's the fines, penalties and interest on top. Plus the likelihood that some individuals other sources of previously undeclared income. The HRMC now use a system called Connect. Through which they can even see the type of car you own.

http://www.accountingweb.co.uk/article/how-hmrc-chooses-property-tax-evasion-cases-investigate/538223

silvercar

G_M wrote: »

I don't know, but surely this equates to holiday lets?

There are holiday homes let out short-term all over the country so there must be mortgage and insurance products to support these businesses.

http://www.leedsbuildingsociety.co.uk/mortgages/holiday-let-mortgages/

http://www.thisismoney.co.uk/money/mortgageshome/article-2414887/Goldmines-roses-round-door--join-holiday-let-boom-Renting-property-tourist-hotspot-make-1-000-A-WEEK.html

The problem is that this isn't a property bought for a holiday let, it is a residential home that is also used for holiday type lets.

Winter_Phoenix

This won't apply if you are renting out your whole property and moving out for the duration, but if you are just Airbnb-ing a few rooms for short periods, you may well find that this falls under the Rent-a-Room scheme as far as HMRC is concerned.

I didn't think that this would be the case, as it's not what the Rent-a-Room scheme is intended for. But a few years back I helped out a conference-organiser friend who couldn't find enough hotel & B&B rooms in the area.

I declared the money on my tax form and was told by HMRC that it was tax-free income under the R-a-R provisions.

So some Airbnb income, if it's under the R-a-R limit, may well be treated in the same way.

toastiechar

Many thanks for all the thoughts on this. I'm certainly happy to pay any tax due, it's really just the mortgage issue causing a stumbling block at the moment.

HappyMJ

silvercar wrote: »

http://www.leedsbuildingsociety.co.uk/mortgages/holiday-let-mortgages/

http://www.thisismoney.co.uk/money/mortgageshome/article-2414887/Goldmines-roses-round-door--join-holiday-let-boom-Renting-property-tourist-hotspot-make-1-000-A-WEEK.html

The problem is that this isn't a property bought for a holiday let, it is a residential home that is also used for holiday type lets.

Well there you go..a mortgage for holiday lets and it even says you can live in the property too.

OP looking at that mortgage and compared to your current mortgage is it worth going on to an interest rate of 5.99% just so you can get a few weeks of income from it?

toastiechar

G_M wrote: »

I don't know, but surely this equates to holiday lets?

There are holiday homes let out short-term all over the country so there must be mortgage and insurance products to support these businesses.

That's what I thought until Natwest told me they couldn't offer me anything and didn't think any other provider would be able to either. As the poster below says, perhaps the problem is finding a product for residential homes that are let out occasionally.

toastiechar

HappyMJ wrote: »

Well there you go..a mortgage for holiday lets and it even says you can live in the property too.

OP looking at that mortgage and compared to your current mortgage is it worth going on to an interest rate of 5.99% just so you can get a few weeks of income from it?

This is useful information, thank you. Interest rate not terribly attractive - will have to do some sums!