News

At Total Landlord Insurance we constantly strive to have our fingers on the pulse within the landlord insurance marketplace, reporting on news stories and developments from the world of buy to let cover.

Total Landlord Insurance provides this information without any liability as to its use.

No let and let live for AirBnB landlords

7 April 2016

Home owners cashing in on rents sourced from short term letting are warned that joining web sites like AirBnB can void their buy to let and mortgage agreements.

Chancellor George Osborne raised awareness of the profits home owners can make from short term lets by offering a £1,000 tax break on profits from April 2017.

But lawyers have quickly pointed out that landlords and lenders are wary about allowing sub-letting under any circumstances.

Only one UK mortgage lender allows short term letting – Market Harborough Building Society.

The society agrees to short lets of up to 24 weeks in any year, providing the borrower has asked for permission.

However, borrowers asking for permission can expect to pay a higher mortgage interest rate.
Santander and TSB ‘might’ agree – but Santander will charge £295 each time consent is granted, punching a massive hole in profits for many landlords.

The Council of Mortgage Lenders says lenders have a clause written into their loan contracts banning subletting – and as a last resort this could mean the lender calling in the mortgage early.

Lawyers also point out that subletting a rented home is a breach of the tenancy agreement.
A blog or web site Nearly Legal says at least three cases are before county courts relating to AirBnB and tenancy agreement breaches.

AirBnB offers a £600,000 guarantee – but this does not apply if the person offering the property for rental is not in breach of any agreements with third parties.

“Although lenders are not poring over AirBnB listings to establish breaches, this does not mean the lender will not make an unexpected demand to repay the whole mortgage immediately if such a case was found out,” says Nearly Legal.

The Chancellor’s tax break seems to be out of reach for many – except for landlords without a mortgage.