Air BNB Beware
Air BNB Traps – Beware
As agents we have been involved in short term accommodation and many landlords have asked us about its viability. We manage short term accommodation for many customers and Booking.com are the best source of guests and their fees are reasonable.
If you are thinking of going into short term accommodation, have a quick read below to make sure you dont cause yourself unecessary problems.
Renting out your flat could violate your lease
When you purchased your flat, you signed a Lease, right? That Lease includes specific covenants and restrictions on how you can use the property. While there isn’t a universal Lease, certain rules frequently appear.
Some common lease restrictions related to subletting may include:
- Whether you need permission from the Freeholder to rent out your flat.
- Rules regarding rental terms (e.g., minimum stay durations, restrictions on holiday rentals).
- Noise restrictions within the flat.
- Requirements related to living in the apartment, such as providing Freeholder access or waste disposal.
- Any building-wide house rules, including potential Airbnb bans.
Ignoring these rules isn’t an excuse, and violating lease covenants can have serious consequences. Always review your Lease before listing your flat on Airbnb.
Airbnb Could Affect Your Building Insurance
Building insurance policies vary, so it’s crucial to check yours. Part of your annual service charge covers your building insurance premium, which is calculated based on risk.
Since residents contribute to that risk, renting your flat to Airbnb guests could increase it, potentially leading to higher premiums. In the worst case, if a claim arises and the insurer wasn’t informed about the short-term rental, the policy may not cover the damages.
Additionally, if you have a mortgage, verify with your lender whether short-term letting is allowed, as failing to do so could breach your mortgage terms.
Liability for Damage to Communal Areas
Consider this scenario: you rent out your flat while on holiday and take out Airbnb’s Host Guarantee, which covers damages to your home up to £600,000. Sounds like enough protection, right?
However, this policy has exclusions (e.g., cash, pets, valuables), and crucially, it does not cover damage to communal areas. If an Airbnb guest causes damage in shared spaces, you may be held responsible.
While some building insurance policies cover accidental damage to communal areas, insurers might refuse a claim if they weren’t notified about the short-term rental. If the damage isn’t covered by either your building insurance or the Airbnb guarantee, you could be left with a costly repair bill—and some unhappy neighbors.
How Can Resident Management Companies Restrict Airbnb Lets?
Resident Management Companies (RMCs) can limit problematic Airbnb lets through legal and non-legal means.
Legal Approach:
Since Leases usually outline how flats can be used, the first step is reviewing the Lease. If it states that Landlords must seek permission for subletting, check whether permission was granted and if any conditions (such as minimum rental periods) apply. If no permission was given, a polite request for compliance is often enough to resolve the issue.
Non-Legal Approach:
RMCs are typically made up of flat owners who share common interests. Even if the Lease doesn’t explicitly restrict Airbnb rentals, residents can agree on house rules to regulate them. While enforcing these rules can be tricky, an open dialogue with all residents can create a cooperative, low-cost solution.
What Can Managing Agents in London Do to Assist Landlords?
Identifying and managing Airbnb lets can be challenging, but Managing Agents can employ several strategies:
- Property Management Software: Online portals help engage property owners and highlight potential short-term rental issues in real time.
- Landlord Engagement at Meetings: Face-to-face discussions during resident meetings provide an opportunity to present concerns about short-term lets.
- Building Reviews: Proactive measures, such as installing Perspex sheets in high-traffic areas, enhancing entrance security, or adding CCTV in communal spaces, can help mitigate the impact of Airbnb rentals.
Conclusion
While Airbnb presents new opportunities for travel and property investment, it’s essential to check whether you’re allowed to rent your flat before listing it. Doing so can prevent legal and financial troubles while maintaining good relations with neighbours and building management.
