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Insight article

June 14, 2017

Seven things to consider before you let through Airbnb

If you’re a tenant under a lease, you must consider the following before you let through Airbnb:

Sub-letting

Your lease will more than likely have tenant covenants restricting sub-letting and requiring you to use the property as a dwelling house only (i.e. not for trade or business). Letting space out through Airbnb will likely put you in breach of these covenants.

In the 2016 case of Nemcova v Fairfield Rents Ltd, the lease contained a tenant covenant not to use the flat other than as “a private residence”.

The tenant granted a series of short-term lettings of days and weeks and the Upper Tribunal held that the user covenant had been breached.

There needed to be a degree of permanence for the use to be considered as an occupier’s private residence, and that could not be demonstrated by an occupier residing for just a weekend or a few nights during the week.

The Upper Tribunal made it clear that the interpretation of each case will depend on the individual facts and covenants.

Nuisance

There is likely to be a tenant covenant not to cause any nuisance. Frequently different occupiers coming in late at night, making noise and, in the case of secured blocks, having access to common areas and creating security concerns could well put you in breach.

Breach of these covenants could result in your landlord seeking forfeiture of your lease. However, it would seem unlikely that a Court would not grant relief from forfeiture if you ended the Airbnb rentals, although you may end up with a large legal bill as a result.

Mortgages

If your property is mortgaged, the mortgage will likely have a condition requiring the lender’s consent if you want to let out part or whole. There may also be a condition requiring you to occupy the property as your only principal home to qualify for the interest rate you are paying (failing which you should be paying a higher rate).

Be aware that a breach of the mortgage conditions could result in your lender seeking repayment of the loan and possessing your home.

Buildings and contents insurance

If damage occurs when the property is let out through Airbnb, and you haven’t disclosed what you’re doing or obtained the insurer’s consent, your insurer will likely resist paying out.

Planning

Restrictions have been relaxed for properties in London. Letting out space through Airbnb could be considered a material change of use. However, the Deregulation Act 2015 contains a provision allowing a property to be let as temporary sleeping accommodation for up to 90 days each year (although you should check that your London Borough has not disapplied this provision).

Airbnb, in fact, now won’t allow you to let out for more than 90 days a year unless you confirm you have obtained consent from your London Borough.

The Tax Man

You should check with HMRC the relevant thresholds that apply to you. You may not be required to declare or pay tax for a certain amount of property-related income and may be entitled to a certain amount of income tax relief.

Gas safety certificates

You must obtain one annually.

For further advice, please contact John Gillette.

Note: This is not legal advice; it provides information of general interest about current legal issues.

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