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Many of our Rent Guarantee Scheme policyholders may have encountered more than a few references to Airbnb in the news as of late, or indeed made use of the service themselves for listing, finding or renting properties on a short-term holiday basis. However, landlords letting their properties through the platform have been warned that they could be breaching the terms of any associated buy-to-let mortgage, which will likely have been granted on the assumption that the given property would only be rented out to ordinary tenants. A pronounced rise in London Airbnb listings Suspicion by many buy-to-let industry observers will have been aroused by the Residential Landlords Association's (RLA) report that the number of London listings on Airbnb jumped by 27% between February and June 2016, to 42,646. Of these, 61% were claimed to be available for over three months. Short-term holiday lets can present a tempting opportunity to landlords on account of the higher returns that they may generate, given that their per-night price is often significantly greater than could be expected from a standard private rented tenancy. However, the RLA has suggested that the increasing tendency for landlords to let through Airbnb could be exacerbating the UK's housing crisis. There is, however, a risk to landlords themselves as a consequence of such a practice - that they could be contravening the conditions of any buy-to-let mortgage that they have on a property that they unilaterally use for short-term holiday lets instead of for short-term rental. Stiff warning from lending industry Council of Mortgage Lenders (CML) spokesman Bernard Clarke has been quoted as telling the UK edition of the International Business Times: "Most lenders do not allow borrowers to offer short-term lets on their properties, whether on an owner-occupied or buy-to-let mortgage. "That is because lenders accept the risk associated with a particular kind of mortgage – so a loan to an owner-occupier is advanced on the basis that the property is to be occupied by the borrower and his or her family. Similarly, lenders offer buy-to-let mortgages expecting there to be a stable, reliable rental income to enable repayment of the mortgage. "Mortgage products are based on a careful assessment of risk, including cash flow, the risk of default, the level and reliability of income and any risks associated with how the property is to be used. If the mortgage is then used in a different way, the risks for the lender may be different." Clarke urged borrowers to consult their lenders before taking any sort of action that could impact on the terms of their loan. To learn more about our rent guarantee scheme and the other products that could take much of the uncertainty and stress out of your life as a landlord, please contact our buy-to-let experts here at Advanced Rent today.
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