There has been an astronomic rise in the presence of Airbnb in the UK in recent years.
Airbnb is a peer-to-peer platform connecting homeowners with space to spare to those who need space for the short term. They can let an extra room while still residing on the property or let the entire property while they are away.
The Campaigning Charity Shelter as always is active again in the UK housing sector. It provides advice and valuable assistance through its campaigns for better investment in housing. The shelter is also at the forefront in demanding changes to laws and policies to improve the lives of the homeless and badly housed people in the UK. A fringe meeting organized by them recently had North Devon MP Selaine Saxby as its main speaker.
The MP is a crucial campaigner for a mandatory register of Airbnb. The idea of a mandatory register was first mooted by Westminster North Labour MP Karen Buck, backed by nine other MPs. They demanded that property owners inform councils of the dates their property is being used for short-letting.
MP Karen Buck said that property owners could earn £ 1,800 a week on average for a short-term renting out of a two-bedroom flat. An assured short-hold tenancy will only earn them £620. MP Selena Saxby spoke in the House of Commons in favor of a compulsory register of short-let hosts. She was supporting an initiative by former Liberal Democrat leader Tim Farron. She had claimed that in her constituency, only two properties were listed for long-term rentals. A highly disproportionate 123 properties were available on Airbnb.
What Leaseholders Must Know About Airbnb Short-Term Lets Before Entering Into a Lease Contract
Airbnb allows property owners (freeholders and leaseholders) to rent their properties for up to 90 days for short-term lets. It has proven to be a lucrative proposal for many and a simple way to launch a property business. However, leaseholders must consider several things before sending out those stunning photographs from the best angles of their property. This is especially crucial for those who own a long lease on their property – who signed up to abide by certain covenants.
Put simply, nearly all UK leases for residential properties do not allow leaseholders to use their property as a holiday home listed on Airbnb without permission. The reason is that a residential lease is granted for the purpose of persons living “to dwell” in the property and the concept of living is not ‘short stays’ and holiday lets. Therefore case law has held that Airbnb lets do not pass the ‘to dwell’ test.
In the case of Nemcova v Fairfield Rents Ltd, the courts also investigated that ‘Airbnb use’ was deemed to be a ‘change of use of the property’, i.e., from residential dwelling to hotel use - a planning consideration. This analysis was based on the lease terms in the case stating that the leaseholder was “not to use the premises or permit them to be used for any illegal or immoral purpose or any other purpose otherwise than as a private residence”, of which Airbnb is not one! So, use of the property as a holiday lease through Airbnb was regarded as a breach of this lease term.
In addition, the activities of any Airbnb guests are also considered by many legal experts as a breach of the lease. They cause unacceptable levels of noise and disturb the neighbours especially with the rise in some individuals hiring Airbnb apartments as party venues, or worse – short term drugs or prostitution dens.
Other Aspects to Consider - Insurance
Leasing a property for a holiday entails a unique type of insurance that protects the freeholder. If such insurance is not in place, the agreement could be seen as violating various issues related to health and safety matters. There is also the possibility of the existing insurance being invalidated by using the property for a different purpose. This could have serious implications for the freeholder of the property.
If the property has planning consent for residential use, then it would need a change of planning consent to become a holiday let. Local Authorities are authorized to serve enforcement notices on property owners for breach of laws related to planning. Enforcement Notice not only require the unauthorized use to stop, (or give a timescale within which this must occur), but may also ultimately lead to a fine. Before entering into a business contract with Airbnb, leaseholders must check with their local authority if they enjoy any exemptions that allow the use of the property as a holiday home.
If the leaseholder has entered into a mortgage agreement, it should be noted that listing a property on Airbnb may create a breach of the mortgage agreement. Typically Mortgagees impose sanctions when a mortgage condition is breached – such as a higher interest rate. So if you own your property on a lease, you should beware before listing the property on Airbnb and allowing in-holiday guests for short-term lets.
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