AIRBNB – things to consider before you ‘host’!
Airbnb, which started in San Francisco with a small apartment and an inflatable air bed, now has approximately 100 million users worldwide. Here, in Northern Ireland, there are hundreds of active rentals on the Airbnb website with many homeowners deciding to let out all or part of their properties during certain periods of the year. Some buy-to-let property owners are also favouring this method, being of the view that they can earn more income by way of short-term lettings as opposed to entering into a traditional standard yearly lease with a monthly rent.
It isn’t as straightforward as it sounds, however, with some landlords finding themselves in breach of the rules and regulations and facing legal action as a result. ‘Hosts’ should therefore be aware of the legal pitfalls before listing their property on Airbnb or similar sites:
- Mortgage terms – Check the provisions of your mortgage. Residential mortgages generally prohibit sub-letting without the lender’s consent. You should therefore obtain consent. Depending on your mortgage terms, this change of mortgage term could result in an increased mortgage rate, a penalty payment or even an urgent repayment demand. Surprisingly, many buy-to-let mortgages also prohibit short-term letting, so exercise caution when reviewing buy-to-let mortgage products.
- Insurance – Your buildings and contents insurance may be invalidated if you have not disclosed that the property is being used for short-term letting. Airbnb do provide a ‘Host Guarantee’ and ‘Host Protection Insurance’ which covers damage caused to the property by guests. There are a number of exclusions and limitations to these and so they should not be considered as a substitute.
- Northern Ireland Tourist Board– All tourist accommodation in Northern Ireland must be certified by the Northern Ireland Tourist Board (NITB). This ensures that visitors can expect a minimum standard for any type of accommodation and they can be confident that the premises meets the required health and safety criteria. It is illegal for someone in Northern Ireland to rent out their own rooms or apartments for short-term lets (under 30 days) unless they are certified by NITB.
- Planning laws – Sub-letting your property for short term lets could potentially mean a change of use under planning laws. Consequently, you may be required to obtain permission.
- Other restrictions – Check your lease or title deeds for any restrictions on sub-letting. There may be management company restrictions on letting or, commonly, there may be a covenant restricting the owner from using the property for any use ‘other than as a private residence’.
Please be sure to check all of the terms and conditions of your mortgage and seek the relevant permission where necessary. For further information on the above, or for any commercial property related query, please contact our Commercial Property team.