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Could listing on Airbnb put you in trouble with your mortgage lender?

Accommodation site Airbnb has seen bookings in London rise by 130% in the last year, according to new data from Colliers, with 4.62m nights of accommodation booked on the home-sharing site. But some owners hoping to cash in on this trend may be breaching their mortgage contracts by doing so. People hoping to make some extra cash from their only homes are likely to have a residential mortgage – and Which? has found that many high-street lenders may not always allow such properties to be used for short-term letting.

Which? explains how using Airbnb or similar house-sharing platforms might impact on your mortgage and how you can protect your financial arrangements.

  • If you want advice on the best mortgage to suit your circumstances, you can speak to an impartial, expert adviser by calling Which? Mortgage Advisers on 0808 252 7987. [1]

Renting out your whole home

Owners on Airbnb or similar house-sharing platforms often offer to rent out their entire property, while spending those nights with friends or family member. But many mortgage lenders see this as a breach of their mortgage terms, as you’re making money from your property, not using it as your residence.

Which? asked high street banks whether listing a property with a residential mortgage would be a breach of their mortgage terms and conditions:

  • Royal Bank of Scotland said offering your whole property would likely be a breach of the mortgage terms;
  • Nationwide does not allow a property to be let on Airbnb if it is the owner’s only residence;
  • Santander said owners planning to rent out their whole apartment would need to apply for consent to let, which would involve paying a fee;
  • Lloyds and Nationwide both said anyone seeking to let out the property would need to gain consent first, with each request decided on a case-by-case basis.

If you breach your mortgage contract, you could face a range of penalties – from needing to pay higher interest rates to, in the worst case scenario, having the loan called in. But most lenders indicated they would work with their customers to find a solution. MetroBank operates differently.

In November 2016, it announced that all customers on a residential mortgage would be allowed to let out their properties for up to 90 days – an exception brought in specifically to allow clients to use Airbnb and other home-sharing platforms. Find out more: Mortgage lender reviews[2] – find the best mortgage lender

Renting out a room

Instead of offering your entire apartment on Airbnb, it’s also possible to let out a room within your home. The majority of lenders will allow owners to take in ‘lodgers’, meaning a person who pays to live in a room at the property while the owner also lives there.

In this situation, you may be allowed to continue on your standard residential mortgage. Often though, lenders told Which? that they would need to be informed:

  • Barclays said its borrowers were usually allowed to have short-term guests without obtaining consent, though longer-term guests may require informing the lender
  • HSBC, Lloyds and Santander suggested owners would need to obtain consent from the lender to take in lodgers

Find out more: [3]Rent-a-room scheme[4] – how to let a room in your home

Buying a property for Airbnb listing

For in-demand tourist destinations, Airbnb can seem like an attractive alternative to a buy-to-let property – depending on the location, you could equal or outstrip the rent you would receive from a normal tenancy agreement by letting the property on a week-by-week basis. But few high-street lenders are open to approving a mortgage for an Airbnb let.

Which? asked lenders if they offered a standard product that would allow a property to be used primarily for Airbnb:

  • RBS and Santander said none of their mortgage products would support property being used mainly for Airbnb
  • Lloyds does not offer buy-to-let mortgages for short-term holiday letting
  • Nationwide offers a standard mortgage for second homes, but these can only be let out 18 weeks per year

Find out more: Buy-to-let mortgages explained[5] – how to get a mortgage as a landlord

Insurance and local laws impact on Airbnb

Mortgage arrangements aren’t your only consideration when listing on a home-sharing site – local councils may also have restrictions in place. In Greater London, Airbnb systems automatically prevent properties from being booked for longer than 90 days, in line with location planning restrictions. Home insurance is also a potential issue.

If a property is occupied by anyone other than your immediate family, your home insurance cover may be void – it’s worth checking the terms and conditions before taking in paying guests. Airbnb offers Host Protection Insurance but urges that this cannot replace home and contents cover. A spokesperson for Airbnb said hosts were encouraged to check all relevant regulations: ‘We remind hosts to check permissions and follow local rules before they list their space and throughout the year.

‘We also share helpful information and links to official guidance on our responsible hosting page. We want to work with everyone to support regular people who share their homes to help pay the bills.’ Find out more: Home insurance explained[6] – learn the ins and outs of home cover

How can I use Airbnb without impacting my mortgage?

If you want to list your property on Airbnb, it pays to check your mortgage terms and conditions first, as well as any local regulations – and if in doubt, seek clarity from your lender.

While lenders were able to tell Which? broadly what their policies are, your individual circumstances may vary. David Blake from Which? Mortgage Advisers said: ‘Lenders are starting to become a little more open to the idea of short term letting for a period of time and some lenders can offer residential mortgages with consent to let from the outset.

‘As always when someone is looking to buy a property for mixed use, I suggest speaking to an independent mortgage adviser to understand your options.’ Your home may be repossessed if you do not keep up repayments on your mortgage. Which?

Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which?

Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

References

  1. ^ Which?

    Mortgage Advisers (mortgageadvisers.which.co.uk)

  2. ^ Mortgage lender reviews (www.which.co.uk)
  3. ^ (www.which.co.uk)
  4. ^ Rent-a-room scheme (www.which.co.uk)
  5. ^ Buy-to-let mortgages explained (www.which.co.uk)
  6. ^ Home insurance explained (www.which.co.uk)

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