The answer is…. it depends. Start by checking the terms and conditions of your mortgage agreement. Some residential mortgages will prohibit letting of any part of the property whatsoever. Others are willing to take a more nuanced view, especially if you are only letting out a spare room and will still live in the property day-to-day. This could be seen as similar to having a lodger. However, there may be restrictions imposed, such as not letting the room for more than 90 nights per year.
If this isn’t permitted by your current mortgage, it is important that you don’t try to conceal your use of Airbnb from your mortgage provider. If you let out a room in breach of the mortgage terms, your lender may be able to switch your residential mortgage to a Buy-to-Let (BTL) mortgage (on much less favourable terms), or even demand immediate early repayment. In addition, being in breach of your terms may invalidate your home insurance as well, leaving you uncovered if anything goes wrong. Even if your mortgage provider allows Airbnb, it is usually wise to notify them, and some will require you to seek their explicit consent.
Can I use my buy-to-let property for Airbnb?
If you want to let out your whole property for short time periods, a BTL mortgage may not necessarily be a good choice, since BTL mortgages are designed for traditional, longer-term lettings on Assured Shorthold Tenancies, and may have restrictions that do not allow short stays. Recently, some mortgage providers have started to offer ‘holiday-let’ mortgages specifically for those who are interested in using their property to offer short stays. These mortgages tend to come with more restrictions on the property’s value and type, as well as minimum income requirements on the borrower and often a maximum loan-to-value of 75%.
The large variation in the terms and conditions attached to both residential and BTL mortgages can make the use of a mortgage advisor a very worthwhile investment for homeowners seeking to use Airbnb to earn some extra income. A reputable mortgage broker can help you understand your mortgage terms and conditions, and exactly what your options are. They will then be able to source the most appropriate mortgage deal, given how you want to use Airbnb to supplement your income, and help ensure your application is granted.
What else do I need to do when letting my property on Airbnb?
If you do decide to use Airbnb to earn some extra cash, be sure to check any restrictions on short-term letting of property with your local council (short lets are only allowed for 90 days per year in London, for example). Also read the terms of your home insurance and notify your insurer if required. Be aware that this may affect the price of your insurance. If you are a leaseholder, it is also important to understand the terms of your freehold agreement, with may impose letting restrictions. Finally, once you are a successful host, you will have to notify HMRC and declare your extra income.
It is highly recommended you speak to a mortgage advisor before applying for a mortgage for a property you intend to use for Airbnb.
