Author : Mary-Anne Bowring
Airbnb and other short-term lettings websites are a great way to turn your spare room (or even your whole flat) into a nice little earner. Or are they? If you live in a leasehold flat and sub-let a room - even on an infrequent basis - you could find yourself in trouble with your mortgage lender, your insurance company, the freeholder or the neighbours. And in the worse-case scenario you could be in danger of forfeiture which means losing your right to the lease.
The landmark case of Nemcova v Fairfield Rents in 2016 turned the spotlight on short-term lettings. The ruling found that a short-term let doesn't constitute the use of the flat as a private dwelling. As most leases state that flats may only be used as a private dwelling, it is fair to assume that most flat owners will be in breach of the lease if their home is used in any other way. But don't despair. If you do your homework first and get the right permissions you could still be onto a winner. So what do you need to do?
First, check your lease. This is the key document for all leasehold issues. Look for any clauses outlawing sub-letting or that stop you giving up possession of the property without prior consent from your freeholder. Leases come in all shapes and sizes and some are easier to interpret than others. If in doubt, our legal team at Ringley is available for help and advice on all lease-related issues, so do give us a call if there is something in your documents that you don't understand. The next step is to contact your freeholder. They don't have to give you permission to sub-let your flat but they may be quite happy for you to do so. However, they may give their permission but charge you for subletting the property. Where this is the case, do the maths. Is it still worthwhile?
Even if the answer is yes, don't start listing your property yet, Check the small print on your mortgage agreement or contact your lender to find out whether you need their permission too. Don't forget to notify your insurance provider of your intention to let out your property so that you can make sure your guests belongings will be covered under your own contents insurance policy. Again, this may mean an additional charge. Last but not least, consider your neighbours. They may be less than impressed by the potential for noise and disruption to the block if people are coming and going on a regular basis, particularly if they are long leaseholders with a vested interest in the wellbeing and "quiet enjoyment" of residents. No amount of extra income will make up for falling out with your neighbours or even finding yourself involved in a full-blown dispute, so think carefully before going down this route.
And a final word of caution. Don't forget - even with the most forgiving of neighbours and regardless of any other permissions - under the Greater London Council Act 1973, if you live in London you can only sub-let your home for up to 90 days a year.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
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