September 19th, 2018
With more people than ever before using sites such as Airbnb when they travel, now is the perfect time for homeowners and landlords to take advantage of this lucrative market. After all… recent research released by Airbnb has revealed that UK ‘hosts’ earned more than £657million through the site in the year to July 2017, which works out at about £3000 a year.
However, although there are many opportunities to generate a steady and reliable income using sites such as Airbnb, it’s important that all homeowners are aware of the potential loopholes in their mortgage agreement when it comes to renting out their property.
For example, if you own a property it is highly likely that you will have a mortgage, and this is where problems can crop up.
This is because, the vast majority of lenders stipulate in their terms and conditions that all homeowners and landlords must ask for consent before letting out their property – a compulsory requirement that most property owners are probably not aware of.
And this is the case with a wide range of high street lenders, including the Royal Bank of Scotland and Nationwide, whose terms and conditions are incompatible with short-term letting. Failure to comply with these conditions of purchase can invalidate your mortgage agreement, so it’s vital that you take the time to check in with your lender first if you are thinking about renting out your property.
There are lenders that allow borrowers to rent their properties out on sites such as Airbnb for 90 days a year without approval needed.
What happens to your mortgage if you breach your terms and conditions?
Breaching your mortgage terms can have serious consequences, as letting without gaining permission can lead to an increase in your mortgage rate.
And it’s not just homeowners that are risking invalidating their mortgage using sites such as Airbnb, tenants are too!
For example, although subletting is legal, all tenants need to make sure that they have their landlord’s permission beforehand, as if they don’t, they could also be at risk of breaching their rental contract, which can lead to eviction.
With this in mind, it’s definitely worthwhile checking in with your mortgage lender before using sites such as Airbnb.