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    • parcaal
    • By parcaal 16th Apr 18, 8:21 PM
    • 25Posts
    • 9Thanks
    parcaal
    Does Airbnb violate your mortgage?
    • #1
    • 16th Apr 18, 8:21 PM
    Does Airbnb violate your mortgage? 16th Apr 18 at 8:21 PM
    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?
Page 1
    • HampshireH
    • By HampshireH 16th Apr 18, 8:38 PM
    • 865 Posts
    • 925 Thanks
    HampshireH
    • #2
    • 16th Apr 18, 8:38 PM
    • #2
    • 16th Apr 18, 8:38 PM
    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
    • By Pixie5740 16th Apr 18, 8:53 PM
    • 12,727 Posts
    • 18,180 Thanks
    Pixie5740
    • #3
    • 16th Apr 18, 8:53 PM
    • #3
    • 16th Apr 18, 8:53 PM
    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?
    Originally posted by parcaal


    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
    • By parcaal 16th Apr 18, 8:58 PM
    • 25 Posts
    • 9 Thanks
    parcaal
    • #4
    • 16th Apr 18, 8:58 PM
    • #4
    • 16th Apr 18, 8:58 PM
    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
    • By parcaal 16th Apr 18, 9:03 PM
    • 25 Posts
    • 9 Thanks
    parcaal
    • #5
    • 16th Apr 18, 9:03 PM
    • #5
    • 16th Apr 18, 9:03 PM
    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
    • By HampshireH 16th Apr 18, 9:06 PM
    • 865 Posts
    • 925 Thanks
    HampshireH
    • #6
    • 16th Apr 18, 9:06 PM
    • #6
    • 16th Apr 18, 9:06 PM
    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
    • By Cakeguts 16th Apr 18, 9:06 PM
    • 4,734 Posts
    • 6,953 Thanks
    Cakeguts
    • #7
    • 16th Apr 18, 9:06 PM
    • #7
    • 16th Apr 18, 9:06 PM
    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).
    Originally posted by parcaal
    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
    • By Pixie5740 16th Apr 18, 9:34 PM
    • 12,727 Posts
    • 18,180 Thanks
    Pixie5740
    • #8
    • 16th Apr 18, 9:34 PM
    • #8
    • 16th Apr 18, 9:34 PM
    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
    • By parcaal 16th Apr 18, 9:44 PM
    • 25 Posts
    • 9 Thanks
    parcaal
    • #9
    • 16th Apr 18, 9:44 PM
    • #9
    • 16th Apr 18, 9:44 PM
    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
    • By AdrianC 17th Apr 18, 8:22 AM
    • 18,049 Posts
    • 16,357 Thanks
    AdrianC
    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.
    Originally posted by parcaal
    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
    • By davidmcn 17th Apr 18, 8:32 AM
    • 8,233 Posts
    • 8,593 Thanks
    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.
    • Lunchbox
    • By Lunchbox 17th Apr 18, 8:47 AM
    • 191 Posts
    • 160 Thanks
    Lunchbox
    See this page from the Leasehold advisory service; https://www.lease-advice.org/article/airbnb-leaseholders-be-aware-4/

    Your main issues are going to be your lease and the buildings insurance. There is legal precedent for Airbnb type lettings breaching a clause in the lease referring to only being used as a ‘private residence’, so you need to check this.

    Most buildings insurance policies for blocks of flats (and also leases) state that if a property is to be let as a while, it must be as an assured shorthold tenancy and specify a minimum period. Many mortgage lenders also require this.

    Is the flat in London? If so you also need to look at the planning permission issue relating to letting out a property short term for more than 90 days in a year.

    You say that many properties listed have similar arrangements and that this looks positive, but on the other side of the coin, there are increasing numbers of stories about freeholders, local authorities and mortgage lenders taking action for breaches of lease or planning laws.
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