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  • Legal FAQs

    Serviced Accommodation / Airbnb - legally?

    Hi All,

    Anyone have any experience of Airbnb and leaseholds. It seems that Airbnb is full of places to stay when you search i.e. city centre apartments but most of the advice I'm receiving is saying it's basically not allowed because it's sub letting.

    So, how are people getting away with it ? Because obviously they are...

    So the question is... if I wanted to buy an apartment with the sole purpose of short term letting in so far as I wanted to let it for only four or five days a month (as in Airbnb for example) and keep it empty for my own use at other times how can I make that happen.

    It certainly is as there are companies that look after serviced accommodation (I know I've found them). And one in particular stated they only dealt with city centre apartments... so there goes the 'only buy freehold' argument.

    Any help/advice much appreciated

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    Hi Paul,

    The Air BnB sector is a relatively new one and it is therefore something of a "Wild West".  Many people are piling in, not undertaking it in a legitimate fashion, and no doubt making a lot of money.

    That is their choice and they take the risk.

    Whether you want to take those risks is also your prerogative - but first of all understand the risks, before you set about taking them and breaking or bending the rules that are in place.

    Leasehold properties tend to have caveats about sub-letting or short term lets.  A lot of people will be breaking those and getting away with it.  However, if caught out, your lease could be forfeited.  Are you prepared to take that risk?  If so, crack on.  But bear in mind your neighbours might not appreciate people coming and going at your flat, and may report you to the management company.

    As you are only renting the flat out for a few days per month, the risk is relatively small.  If the freeholder/management company find out, they may rap you on the knuckles and give you a warning, or charge you a sub-letting fee.

    The companies offering the management are simply a service provider.  They have little interest in whether it is being done legally.  That is not their responsibility, although some of the more responsible ones do seek to educate hosts about the legal side of things.

    The second thing is that, if you have a mortgage on your property, it may be a breach of the mortgage T & C's to undertake short term rental activity.  The chances of the lender finding out are slim, but are you willing to take that risk?  The worst case scenario is that the loan could be called in - but that is a most draconian measure. The lender might put up your interest rate is a more likely outcome.

    Thirdly, you need specialist insurance including PI insurance, otherwise your normal household insurance could be null and void.

    So, what you can deduce from the above, is, that to do serviced accommodation completely legitimately, you would need a freehold house without a mortgage on it.

    Clearly, thousands of flat owners are ignoring that.

    The final issue is regulatory risk and that is growing by the day.  Regulation will come to the Air BnB sector and it is already on the Government's agenda.  The rogues will spoil it for the legitimate operators and red tape will start to appear - it already is in city centres - not to mention that the hotel industry is pressurising the government to curb it as it is decimating the hotel industry.

    These threads will shed some further light:

    Serviced accommodation - guide & pitfalls 

    Air BnB and serviced accommodation - the reality

    Short term letting strategies - differences

    I would recommend that you read all the threads and comments above to give yourself a thorough understanding of what you might be getting in to.

    I hope that helps?

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    Hi Vanessa,

    That's perfect thank you. Your reply has basically confirmed everything I had concluded from my own investigations - that the majority of those jumping on the bandwagon were doing so without thought to the consequences because of the money they are making. As you say there will come a time when the Airbnb sector will be regulated, at present people are definitely 'getting away with it'.

    Thanks again

    Paul

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    My understanding is that the AirBnB platform was only ever intended for people letting out their own bedrooms or their whole dwelling if they went away for a while - it was never intended to advertise whole dwellings which are permanently used for this activity.

    There are people doing SA legitimately in a professional manner, but I think they are minority.  Most are riding the gravy train as long as it runs.

    I think we will see regulation coming to this sector, for the reasons I have given, not to mention the abuse of properties being used for this activity, which was mentioned in the links I sent.  Furthermore, properties being used for short term rentals are taken out of the stock for long term rentals, when we already have a housing crisis. This pushes up rents due to lack of supply of properties available for a long term rental.

    So the writing is on the wall as far as I am concerned.  Holiday lets are more sustainable imho, so perhaps have a look at those?

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    Hi Vanessa,

    In relation to the posts about airbnb, I've asked this previously on PT but need some advice and direction as I'm in limbo at the moment...

    I'm not resident in the UK for long periods but need a UK address, hence the initial Aibnb query. My thought was to buy somewhere and cover some of the costs i.e. council tax, utilities (and service charges if an apartment) etc. by renting out short term when I'm not using it. I own a few BTL properties and as previously stated need a UK residence for work purposes. I've been viewing freehold property over the past couple of days, along with leasehold apartments. I have an upper limit as to what I want to spend as it will be a cash purchase - so no issues with mortgage lenders and letting out.

    I see holiday lets mentioned quite frequently now. Any suggestions as to my options would be much appreciated.

    Paul

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    Hi Paul,

    You could do either serviced accommodation or holiday lets - they are just variations on a theme.  I would opt for holiday lets if I were in your shoes.  It is less hassle imho.

    A small freehold house would be the lowest risk option.

    See - Guide to sourcing & setting up a holiday let

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    ok thanks, I'm just about to read through all the links in setting up holiday lets and I'm assuming whatever I buy can be my residential address? Are there restrictions on my occupancy of it? Just thought I'd ask this, I'm sure its in the posts somewhere but I want to be sure before I start reading sorry!

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    Yes, you can use it as your residential address. 

    ​I believe there is a residential mortgage product that allows you to occasionally let as holiday let.  You need to get specialised advice, such as that from the PT Broker Team on 0333 363 6507, who will source a suitable mortgage for you.

    See - Holiday Lets - that you can live in ....

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    Thanks Vanessa,

    No mortgage needed - cash purchase. I've just googled gov.co.uk and one of the 'restrictions' is a minimum of 150 days letting a year to qualify as a furnished holiday let unless averaged out over a number of properties. Thanks for your help it seems this might be the answer to my uk address - if I can find a decent property at the right price.

    One last question, sorry I know I'm harping on but I have little knowledge of this, whats the difference between Airbnb and a holiday let. Are they not the same thing but under a different banner? Or is it all to do with tax etc?


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    Airbnb is a website for advertising your property, initially intended for short term lets of a spare room, it has expanded rapidly into other areas. Similarly you can find short term lets, lodger lets, houseshares and ASTs on both Spareroom and Rightmove. The website used for advertising doesn't define the use of the property.

    As you have found, there is a definition for a Furnished Holiday Let, as there are for other types of lettings. How the property is let dictates the relevant legislation and taxation.

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