I own a leasehold flat. Can I let it on Airbnb?

Question

“Some of my friends have chosen to rent out their homes in the summer months via Airbnb as a means of making a little extra money. I am the leaseholder of a flat in a block and I’m considering doing the same on an ad hoc basis for the periods that I’m away on business. Bearing in mind that my flat is leasehold, not freehold, what are the issues I need to consider?”

Answer

There are many holiday rental websites that make it easy for homeowners to rent out their properties to holidaymakers all year round or just for the busy summer months. This has led to holiday home rentals becoming popular, especially here in the capital, and Airbnb is probably the most well-known website in the holiday rental market.

As a leaseholder in a block of flats, if you wanted to let your flat on Airbnb, there are a number of issues you will need to consider before proceeding. Here we summarise some of the pitfalls you’ll want to avoid:

Does the lease allow it?

In many cases, there will be clauses within your lease that will effectively prohibit you from short term lets. They shouldn’t be ignored:

  • Many leases specify that a flat can only be used for residential purposes in single family occupation.
  • Many leases prohibit letting a flat for less than six months.
  • Many leases prohibit running a business from the premises and holiday lets is a business use.

Will it cause a nuisance to your neighbours?

  • Most leases will prohibit the lessee from anything which would cause a nuisance, annoyance or disturbance to other residents in the building
  • Holiday lets involve the constant coming and going of different guests which often leads to security concerns for other residents
  • Holidays lets also create problems with late night noise, parties and issues with excess rubbish
  • It may be difficult to maintain good relations with your neighbours if you allow regular holiday lets.

Does the buildings insurance policy allow it?

  • Most policies will not cover short term lets so you will not be covered for any damage caused by a guest in your flat or in the common parts of a building
  • If you fail to notify the insurer, this is likely to invalidate the policy.

Does your mortgage company allow it?

  • Most mortgage companies would require you to apply for permission to let your flat.
  • Letting your flat is likely to lead to a higher interest rate on your mortgage.

Do you need planning permission from the council?

  • It’s worth noting that you cannot let your flat as a holiday let for more than 90 days in any given year without applying for planning permission.

In Summary – can you let my flat on Airbnb?

The short answer is that quite often, with a leasehold property, there will be factors preventing you from letting your flat:

  • In most cases your lease will not allow it
  • In most cases it will invalidate the buildings insurance policy
  • In many cases your mortgage company won’t allow it
  • You may need planning permission

Holiday rental companies like Airbnb do remind their leaseholders (or ‘hosts’) to check that their leases (and any wider local rules) will allow them to rent out their property. However, the onus to do this is on the leaseholder, not on Airbnb. If you are considering letting your flat on Airbnb, please make sure you discuss this with JCF first to establish the position in your property.