To Airbnb or Not?

Unknown fact about short-term lets.

You may be considering letting out your property during the upcoming Royal Wedding and paying for that trip away? Perhaps you are considering buying a property with a view to rent it out on a short term basis?

In this post we discuss the limits on short term lets and what you should consider before you do.

It is undeniable that in the last 5 years the likes of ‘Airbnb’ and ‘Homeaway’ have transformed the landscape for tourism and hotel culture and in doing so, caught the attention of many. Many homeowners are enticed by short term lets; premium rates, short term rental periods and a constant demand for properties in London – it seems fool proof?! This ‘trend’ is not slowing down but rather quite the contrary, the demand for short-term lets globally is increasing. As a result many individuals are considering utilising this demand and turning their home/ second bedroom into extra income. There are a variety of methods of letting; from letting out a property whilst also on holiday, renting out a second home, or even buying an investment property with a view to generate income from short-term lets.

For individuals who are considering generating an income from a property and/or buying a property for this purpose, it is important to be aware that there is a restriction on how many days a year a residential property can be let in Greater London on a short-term basis.

Short term rentals in Greater London are subject to planning restrictions. The general rule is this; if you are using your residential premises as temporary sleeping accommodation it is considered as a “material change of use” for which planning permission is required.

However, the Deregulation Act 2015 created an exception to this rule.

The exception = The “90-day Rule”

The Deregulation Act 2015 permits short term letting, so long as the number of days does not exceed 90 days and at least one person providing the accommodation is liable to pay Council Tax for the property.

The exception therefore enables a residential premises to be used for temporary sleeping accommodation without it being considered a “change of use” (NB – This can vary depending on your local planning authority).

You are therefore limited to letting a property on a short-term basis for up to 90 days in a year in Greater London.

In response to the above, in 2017 Airbnb introduced a 90-day limit for properties listed in Greater London being let out on a short-term basis. The 90-day limit is automatically placed on any property in London that has been let as an “entire place” for any more than 90 days.

However, this restriction is not just imposed by Airbnb, it a restriction for all short-term lets and should be a consideration if you are contemplating and/or already letting out your property on a short-term basis.

If you reach your maximum 90 days, Airbnb will not allow you to accept any new short-term reservations for that calendar year. (NB – there is a way to remove the restriction, which will allow you to host for long(er) term reservations and if a letting is more than 90 days it will not be considered as short-term stays and will not count towards your short-term limit. However, you must comply with the regulations to be able to do so.)

Other considerations to look out for

In addition to the above, before you let your property there are also other considerations that must be considered as it may also affect your ability to let out your property:-

Contracts: Leases, contracts and/or regulations relating to the building may prohibition subletting – or any other restriction against hosting.

As the majority of properties in London are Leasehold or a share of freehold, you must check if you have the authority to lease your property out.

If you are a leaseholder – tread carefully. You should check if your lease allows for sub-letting and/or if it contains any restrictions in relation to the use of your property. Breach of a covenant in the lease can ultimately lead to forfeiture of your lease by the landlord.

Mortgages: If the property has a mortgage (or any form of loan secured against it) there may be a prohibition against subletting, or any other restrictions against hosting.

This is not an exhaustive list and if you are looking to let out a property or buy a property for that purpose we advise you to take legal advice on your ability to do so.

If short-term letting seems too much hassle, there are always avenues whereby you could rent your property on a longer term and avoid being governed by the above rules. For more information, please get in touch.

Whatever you do decide to do, we are well equipped to provide advice on the rules, regulations and all aspects of landlord and tenant matters within this area of property law.

For queries relating to short-term lets or any landlord and tenant matters please contact Aileigh Brough at Meaby&Co on abrough@meaby.co.uk or call 020 7703 5034.

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