Does Airbnb violate your mortgage?

parcaal

Hi all,

I am relatively new chap here and still working my way around. I have had a few searches on this topic, but haven't managed to found a satisfactory answer, so decided to open a new tread.

I am currently a leaseholder of a flat with a mortgage with LTV of around 75%. I currently live in the property. After making a few calculations, it seems it make sense to rent on Airbnb my flat and move out to live in another (in fact potentially more spacious) flat.

I have done a bit of research over the past few days and noted that Airbnb is not well supported by the mortgaging banks.

The residential rental rates wouldn't allow me to leave the flat unoccupied by me and rent it all. The buy-to-let options also seem to be rather conservative over the short-term holiday letting.

I wanted to check with you and your experiences, if anyone has rented an entire flat and has mortgage on it, what were the legal/implications etc. that you came across when starting to rent initially?

Has anyone worked out a 100% legal compliant formula to rent their flat on Airbnb while still making some profit on it?

HampshireH

Does your lease allow you to sublet? Most dont.....

Unlikely the mortgage company would be too happy but I don't speak from experience. I'm sure someone who knows who come along.

What does your lender have to say on the matter? Have you researched on tinternet anyone else with the same lender & plan?

Pixie5740

parcaal wrote: »

Hi all,

I am relatively new chap here and still working my way around. I have had a few searches on this topic, but haven't managed to found a satisfactory answer, so decided to open a new tread.

I am currently a leaseholder of a flat with a mortgage with LTV of around 75%. I currently live in the property. After making a few calculations, it seems it make sense to rent on Airbnb my flat and move out to live in another (in fact potentially more spacious) flat.

I have done a bit of research over the past few days and noted that Airbnb is not well supported by the mortgaging banks.

The residential rental rates wouldn't allow me to leave the flat unoccupied by me and rent it all. The buy-to-let options also seem to be rather conservative over the short-term holiday letting.

I wanted to check with you and your experiences, if anyone has rented an entire flat and has mortgage on it, what were the legal/implications etc. that you came across when starting to rent initially?

Has anyone worked out a 100% legal compliant formula to rent their flat on Airbnb while still making some profit on it?

:huh:

There isn't a formula to work out. Either both the mortgage lender and freeholder will give consent to let the flat via AirBnB or they won't. Given that no one on the forum can read the terms of your mortgage or your lease then no one can say one way of the other.

I doubt your neighbours would be too happy about it either. I presume there is a communal entrance or do you have a main door flat?

parcaal

Hi HampshireH,

The building I live in is mostly buy-to-let (maybe 85+% are being let), I am one of the very few that actually live in its own leased property. Don't think agreeing to let the property will be challenge, unless they have specific issues with Airbnb.

I can see on the Airbnb website there is another property (in fact on my floor) that is listed there - I agree this doesn't mean it is 100% legal and legit, but it looks somewhat positive.

parcaal

Thanks for the reply Pixie,

I am not trying to be cheeky here - just wanted to check what others have experienced and how they have worked around this. I am sure many of the properties listed on short-rent holiday sites do have similar arrangements (I agree, probably no-one will be 100% same, but there will be a decent amount of similarities).

HampshireH

Just out of interest does your neighbour get much interest?

I'm assuming you never noticed if you only knew because it's on the website?

Cakeguts

parcaal wrote: »

Thanks for the reply Pixie,

I am not trying to be cheeky here - just wanted to check what others have experienced and how they have worked around this. I am sure many of the properties listed on short-rent holiday sites do have similar arrangements (I agree, probably no-one will be 100% same, but there will be a decent amount of similarities).

Some councils have banned short term lets in certain areas. So if you do airbnb in one of these areas expect to be prosecuted. Long term lets are fine it is the short ones they don't want.

Pixie5740

There isn't a work around. If neither the terms of your mortgage or lease prohibit letting through AirBnB or similar fill your boots. If you do require consent then your choices are to get consent or to chance your arm and hope you don't get caught.

It's like speeding. The speed limit on the A90 is 70 mph but that doesn't stop people driving faster than that. They might get caught but then again they might not. You roll the dice and you take your chances.

parcaal

Hi all - the council doesn't have issues with it.

Also the neighbour seem to have a decent occupancy from now to September he has 60% occupancy filled and I am sure there will be a few last minute bookings too.

The rate he charges also is pretty good, so I believe his income would be in the region of 50%-100% higher than what you could get if you let long term.

Currently my partner also works part time in the afternoons and is happy to do check-ins/outs and potentially clean (if we decide not to pay someone to do this).

AdrianC

parcaal wrote: »

I am currently a leaseholder of a flat with a mortgage with LTV of around 75%. I currently live in the property. After making a few calculations, it seems it make sense to rent on Airbnb my flat and move out to live in another (in fact potentially more spacious) flat.

Hmm... I hope those calculations are thorough...


What have you worked on for cleaning costs, for insurance, for maintenance?
You have considered income tax?
What happens if there's damage or a failure when you have a same-day turnaround between guests?

What's your contingency if AirBnB suspends you or there's another instant show-stopper?

I have done a bit of research over the past few days and noted that Airbnb is not well supported by the mortgaging banks.

More to the point, what does YOUR lender say?



Let's ignore the AirBnB factor, and simply consider an AST tenant.
Will your lender give you CtL in the first place? 75% LtV is minimal for a BtL mortgage if you need to move - have you factored the higher costs for a BtL mortgage in to your sums?

Has anyone worked out a 100% legal compliant formula to rent their flat on Airbnb while still making some profit on it?

Anybody who says they have is lying, and probably trying to sell you something.


Have you read the various horror-stories like this?

http://ejroundtheworld.blogspot.co.uk/2011/06/violated-travelers-lost-faith-difficult.html
"Oh, but there won't be any of my stuff in there..." is missing the point... and that's hardly a one-off.
https://www.theguardian.com/technology/2015/apr/30/airbnb-calgary-home-trashed-drug-induced-orgy
http://www.bbc.co.uk/news/magazine-39528479
https://www.theguardian.com/society/2017/oct/22/sex-workers-popup-brothels-airbnb-mps

davidmcn

I would be astonished if any conventional residential mortgage product allowed you to turn the property into a holiday letting on a permanent basis. If you still need a mortgage then you'd need to switch to a more appropriate product - and I suspect any of those would require e.g. you to own at least another property and/or have a lower LTV.