Think Airbnb? Think Again

March 20, 2017, By Slater Heelis

Since its formation in 2008, Airbnb has completely changed the world of hospitality, allowing everyone with a spare bedroom to make some extra money by renting it out as and when they choose to.

This is certainly a tempting prospect for a large number of people, hence the reason Airbnb has grown into a $24bn company in just nine years.

Although renting on Airbnb seems like a relatively easy, risk-free way to boost your savings you could be standing on very shaky legal ground. Indeed, letting your spare room could potentially land you with a whole load of legal problems.

What are the risks of letting your property on Airbnb?

It doesn’t matter if you own your property or are currently a tenant subletting your spare room, using Airbnb could still leave you open to legal challenges. But what exactly are these risks?

The risks for home owners

You’re living in London

Until recently you were required to have planning permission from Greater London Properties if you wanted to rent out your property for less than 90 consecutive nights. Although this regulation was stopped with The Deregulation Act 2015, it may still be active in certain areas or even specific properties if the local authority chooses to dis-apply it.

You have a mortgage

Most mortgages contain a clause which prevent the letting of your property without the consent of your lender. Getting this consent is typically difficult and usually requires a payment, meaning many people are tempted to take the easy route and just start letting, hoping that their mortgage provider won’t find out. Doing this, however, could lead to several penalties, up to and including calling in your loan and seeking immediate repayment of your mortgage in full.

Invalidating your insurance

Letting your property or a room in your property via Airbnb raises your risk profile with insurers, not informing your insurer could lead to any claims you make being rejected as your policy will be invalid.

Health & Safety laws

Letting the property will define you as a landlord in legal terms, meaning you are forced to comply with all health and safety laws and continually maintain an awareness of them.

Property damage

Although you can vet all tenants before accepting their stay, you still run the risk of damage occurring to your property, accidental or otherwise. If this damage isn’t covered by the Airbnb host guarantee or your insurer you may have to spend a lot of money to resolve the issue.

Your guest may refuse to leave

Although this is extremely rare, you do run the risk that your Airbnb guest simply refuses to leave your property after their agreed-upon stay. Although you can change the locks after their stay has ended, the prudent method of avoiding criminal sanctions and forcing their eviction would be to issue a claim for a possession order, which has a financial cost in addition to the time taken issuing the order. This order could also take 3 months to be resolved, leaving you living elsewhere or stuck with a very unwelcome house guest for 12 weeks.

The risks for tenants

It’s likely to breach your tenancy agreement

The vast majority of tenancy agreements will contain a clause which prevents you from subletting your property without your landlord’s written consent, something which will typically also cover holiday letting. Breaching these rules may lead to your landlord evicting you from the property and forcing you to pay a hefty amount of compensation.

Invalidating your insurance

Much like for home owners, you must ensure to inform your insurance company and pay any increased premiums before letting on Airbnb, lest your insurance policy be deemed invalid.

Health & Safety laws

You will also be required to be aware of and comply with all health and safety regulations, and would be liable for court action should they not be followed.

Property damage

Any damage caused by your guests will be your responsibility, which could lead to you losing some or all of your deposit when moving out in order to pay for the damage.

Restrictions of use

Even if your landlord does give you permission to sublet your property, using Airbnb could lead you to fall foul of change of use law, which restricts the use of the property as a private residence. Using Airbnb may be classified as business use, breaching regulations which prevent business being carried out on the premises.

You’re responsible for nuisance guests

Even if you’ve got everything else covered and you’re ready to start making some extra money by subletting your spare room you should still be aware that you will be responsible for any nuisance guests. If a guest of yours is too loud and the freeholder or any of the other leaseholders bring a claim against you, it has been held that you will be held responsible and face the relevant punishments.

The opportunity to make extra money by letting your spare bedroom to holiday makers seems like the perfect way to make more money, and still can be if you’re fully prepared for the responsibilities it brings. Being aware of these laws and ensuring you follow them will ensure your Airbnb experience is as good – and profitable – as possible.

Daniel Stern, Associate Solicitor – Dispute Resolution