With the increase in popularity of short lets, such as via the Airbnb website, it is important to understand the legal implications, to include whether this type of short-term letting is permitted for leasehold properties and what preparations need to be made to protect your property and restrict your liability.
While it is relatively easy to rent out your home, there is always an increased risk if there is a lack of regulation. You cannot rely on the company arranging the let to cover issues such as injury to a guest for example. The following are some key points to take into account before putting your home on a short-let website:
Insurance
You need to ensure that you have adequate and tailored cover in place in respect of both your home and contents and to cover you in case your guests are injured while staying at your property. Ordinary home insurance does not provide cover for commercial lettings. You cannot rely on the company organising the let to provide insurance cover as you may end up being sued yourself if a guest is injured.
Mortgage lender’s consent
If you have a mortgage over the property, you are likely to need the consent of your lender before you let the property. You should check the terms of your mortgage agreement and ensure that you do not breach these.
Property safety
If you lend out your property, you must ensure that you have had adequate checks carried out in respect of issues such as fire, gas, electrical and structural safety. Your insurer is likely to require you to obtain safety certificates as evidence of this.
If there are any particular dangers at the property, you must take steps to protect your guests from these and make sure that your insurance company is happy with the situation before you allow guests to stay.
Being classed as a landlord
If your property is let for more than a set period of time, you could start to fall foul of other regulations. For example, when a property is let for more than 20 weeks, your local authority will consider it to be a self-catering property and business rates will apply.
Breach of the terms of your lease
If your property is leasehold, the lease will almost certainly prohibit short-term Airbnb-style letting. At the very least you are likely to have to obtain the consent of the landlord and/or any management company.
As well as a clause in the lease specifically banning short-term letting, you should also look out for clauses that prohibit anything that will damage the tone or character of the property or cause nuisance or annoyance. Running a commercial enterprise from the premises may also be banned.
Breaching the terms of a lease is prohibited by mortgage lenders and insurance companies.
Breach of restrictive covenants
Even if your property is freehold, the title may contain restrictions on what activities can be carried out there, for example, in relation to noise, nuisance or running a business. You should check your title deeds carefully and obtain any necessary consents before proceeding.
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