I heard a statistic recently that Airbnb is the world’s largest property company and doesn’t own any property. Not sure if the statistic is correct but it is certainly believable. Airbnb have shot to prominence in the last couple of years. Loads of my friends use it to book their holidays ahead of old favourites such as Owner Direct.
So what about becoming a host on Airbnb? Earlier this year research from Colliers said bookings in London had risen by 130% in the year to July. An amazing 4.62 million nights of accommodation were booked on the site.
If you have property in London, one of the most popular global destinations, you could make significant sums. In fact, one Airbnb landlord reportedly made £11.9 million in 12 months, albeit they do own/manage 881 properties not just one apartment or family home! Increasingly many of the properties on the site are managed by property management companies, not private individuals renting out their owner occupied property or second home.
That doesn’t mean you can’t cash in, but you should do so with open eyes.
What Homeowners Need To Think When Hosting On Airbnb
Do your research, start with Airbnb itself. They have a guide on there to talk you through what is involved and how it all works. You’ll need to pitch your price correctly, again some local research will help here.
It is not without risk, extreme stories have surfaced this year with “pop up brothels” appearing that have been booked via the site. You are letting strangers into your home so you really need to be confident it is right for you.
Next you need to consider what your mortgage company might think. I am going to assume that many of the host Airbnb-ers in London have elected not to tell their lender they are renting out a room, rooms or even their whole property. This is very likely to be a breach of their mortgage terms and conditions. If you are renting out your whole home then your lender will probably insist you apply for consent to let, this may trigger extra interest charges and an admin fee. Usually when you get consent to let the lender is assuming you are doing it long term and any tenant will be subject to an assured shorthold tenancy agreement. However this won’t be the case if you are renting your house out for a week via Airbnb. Definitely a grey area.
If you are just renting a room then lenders tend to be OK if it is a lodger type arrangement. In this situation a lodger would need to sign an occupiers consent form (this is for the benefit of the lender – if the mortgage is not paid and they need to repossess the lodger waives their squatters rights). Again this is not practical if the lodger is only there for a night or two.
I have asked lenders how they would feel about Airbnb and have had different responses from flat no, to a flat yes and lots in between. Annoyingly though I have had different answers from the same lender at different times. I think they are not entirely sure how to deal with it. They obviously know it is going on and it is too impractical to police it.
I think problems will only arise should something go wrong. What I mean is something may happen while a room is occupied that results in an insurance claim. Has your insurer been notified? If so when you claim they may well check that your lender is aware. If your lender is unaware then that could invalidate a claim, leaving you out of pocket.
So I would say you need to be very careful as lenders have not really published any rules for Airbnb but some have been quoted as saying they will work with each individual case on its own merits. If your lender says ‘no’ and you still want to pursue Airbnb you could consider remortgaging with a lender who says ‘yes’. For advice and support in this process, contact me on 020 3355 4841 to discuss your specific circumstances.
In summary if you are thinking of Airbnbing your London home: do your research, speak to your lender and make sure you have the correct home insurance. Good luck!