http://www.telegraph.co.uk/personal-banking/mortgages/shock-threat-airbnb-hosts-mortgage-lenders-say-breach-contract/
Hardly any of Britain’s biggest lenders will allow borrowers to rent out rooms on Airbnb without prior consent – and some forbid short-term lettings entirely.
Airbnb is the best known of a new breed of online platforms that allow homeowners to rent out part or all of their properties. Landlords hit by the crackdown on traditional buy to let are turning to these services in increasing numbers.
Research by Telegraph Money revealed that just two out of nine mainstream mortgage lenders allow Airbnb-type lettings without prior consent.
Borrowers who are granted permission could be charged higher interest or additional fees.
Those who go behind lenders’ backs and list their property on Airbnb regardless would be in breach of their contract and the lender could ask them to repay the mortgage immediately.
Each lender takes a different stance – so, which are the toughest and the most lenient?
What the lenders say
Lloyds, Britain’s largest mortgage provider, allows its customers to let out their main residence on Airbnb without prior consent as long as this doesn’t exceed 16 weeks in any year.
Nationwide is much more strict. It does not allow Airbnb-type lettings of homes where it is the borrower’s only residence.
The building society will also refuse to offer buy-to-let mortgages, through its specialist arm, to customers if they intend to let out their property on a short-term basis. It said these mortgages are only for landlords offering “standard tenancies”.
Nationwide will allow a borrower to let out their entire property on a short-term basis but only if it’s their second home. It cannot be rented for more than 18 weeks a year.
A Nationwide spokesman confirmed that if the owner wants to let out their only property on a “more conventional basis” it will add a 1 percentage point surcharge to their mortgage interest rate.
Royal Bank of Scotland customers who want to rent out a room or their whole house on Airbnb are “encouraged” to speak to the bank first.
If they go ahead with the let without alerting RBS, and they have a residential mortgage, they would be in breach of the terms and conditions.
Those with a buy-to-let mortgage can only rent out their home if it’s for six months or more.
Barclays does not permit borrowers to let out their homes in the short term on Airbnb. It will only consider lets of six months or more where there is a tenancy agreement in place. Permission must be granted in advance.
Santander also requires borrowers to seek prior consent.
A spokesman explained that if the owner remained in residence and let out a room on Airbnb, it would view this in line with taking a lodger – which would also require permission.
If the customer were to live elsewhere and let out their entire home, the bank would charge a fee of £295 as per its usual “consent to let” rules.
Santander said it would not give consent within the first six months of the property purchase.
HSBC said its mortgages are not for Airbnb users.
A spokesman said: “Our residential mortgages are designed for customers who intend to reside in the property on a permanent basis.
“If a customer has a change of circumstances, wishes to use their property for a different purpose or chooses to have temporary lodgers or tenants staying at their property, they should let us know, and each request will be looked at individually.”
Yorkshire Building Society does not consider mortgage applications from “borrowers that intend to sublet their property”.
Metro Bank allows residential mortgage customers to rent out their homes on Airbnb or similar sites for up to 90 days a year without seeking prior approval.
Meanwhile, Virgin Money will allow customers to let a room in the short term, subject to prior approval and certain conditions, including only allowing one room of a property to be rented out.
Borrowers who want to rent out their property on a more formal basis must be given a “consent to let approval” and put a tenancy agreement in place.
What happens if I Airbnb anyway?
If your lender does not permit lettings on Airbnb, or similar services, and you go ahead you will be breaching your mortgage terms.
David Hollingworth, from London and Country, the mortgage broker, said “in theory” a lender could require that the mortgage be repaid due to the breach and that “could require the borrower to refinance the property”.
But Mr Hollingworth added that borrowers may never be caught out, especially if they are just letting rooms out occasionally.
However, he said lenders would find it relatively easy to monitor how properties are being used because the nature of services like Airbnb means they are listed online.