The Temptation of Short-Term Lettings: A Profitable Opportunity or a Risky Move?

• Platforms like Airbnb offer leaseholders a chance to generate extra income by renting out a spare room or even an entire flat. However, this seemingly easy way to earn money comes with potential legal and financial risks, from violating lease agreements to facing issues with mortgage lenders, insurers, freeholders, and even neighbors.

The Legal Precedent: What Nemcova v Fairfield Rents Means for Leaseholders

• The 2016 case of Nemcova v Fairfield Rents clarified that short-term lets do not constitute using a property as a private dwelling. Since most leases require flats to be used solely as private dwellings, engaging in short-term rentals without proper permissions could put leaseholders in breach of their lease terms.

Understanding Your Lease: The First Step Before Subletting

• Before listing a property for rent, leaseholders must carefully review their lease agreements. Many leases include clauses that either prohibit subletting outright or require freeholder consent. Since lease documents vary widely in wording and complexity, seeking legal advice—such as from Ringley’s legal team—can help clarify any uncertainties.

Getting the Right Permissions: Freeholders, Mortgage Lenders, and Insurers

• Even if a lease permits subletting, leaseholders must obtain approval from their freeholder, who may charge a fee for allowing short-term lets. Additionally, mortgage agreements often require lender consent for subletting, and insurance policies may need updates to cover guests' belongings, potentially increasing costs.

Considering the Neighbours: The Impact of Short-Term Lettings on Community Living

• Short-term rentals can lead to increased noise, disruption, and security concerns, particularly in leasehold blocks where long-term residents value stability and quiet enjoyment. Leaseholders should weigh the financial benefits of subletting against the potential for disputes with neighbors and the overall impact on community relations.

Short-Term Letting Restrictions: London’s 90-Day Rule and Other Regulations

• Leaseholders in London face an additional legal restriction under the Greater London Council Act 1973, which limits short-term lettings to a maximum of 90 days per year. Understanding local laws and compliance requirements is crucial to avoid penalties and ensure that subletting remains a viable option.