Mortgage Lenders Ground Home Owners’ Plans to rent out property on Airbnb

Mortgage Lenders Ground Home Owners’ Plans to rent out property on Airbnb

Despite Airbnb announcing 2017 profits of $93 Million and growing exponentially in recent years, UK home-owners are finding it extremely difficult to gain consent from mortgage lenders to rent out their homes; even for extremely short-term circumstances like those used for Airbnb. 

According to the TelegraphMoney report, many lenders forbid the home-owner from renting out their property without consent from the mortgage lender as it could violate the terms of their mortgage agreements.  

Under most agreements, if you desire to advertise your home, your property, on Airbnb, you will need to organize a meeting and then negotiate with the mortgage lender; leaving many people feeling frustrated and powerless.   

The research by TelegraphMoney found that staggeringly, only two out of the nine mainstream mortgage lenders will consent to short-term lettings without the prior approval from the lenders themselves.  

The many of us with Lloyd’s mortgages can confidently place their property on Airbnb without seeking such consent if the combined rental does not exceed 16 weeks. Similarly, Metro Bank allow the home-owner 90 days per year without the need for lender consultation. However, if your mortgage is with Virgin Money, Santander, or RBS, it is time to make an appointment and seek approval before taking any bookings for your property on Airbnb.  

Amazingly, four lenders out of the nine will not allow short-term lettings under the agreements of the mortgage. If your mortgage is with mainstream brokers such as Barclays, Yorkshire Building Society, Nationwide and HSBC, swiftly ensure that that your property is removed from Airbnb for fear of serious repercussions. 

The mortgage lender Nationwide commented: “We do not allow Airbnb type lettings of whole properties with a prime Nationwide mortgage where it is their only residence. We may consider it if a borrower wishes to rent out rooms on the basis of short term restricted accommodation. Borrowers must continue to occupy the property on a permanent basis, the property must continue to be used for residential purposes and borrowers must inform their lender of their intention to ‘rent a room’.” 

If mortgage lenders, that do not approve lettings on Airbnb or any similar lettings service, find home-owners using the service without lender consent, they can declare a breach of mortgage terms. Under these circumstances, the lender can demand that the mortgage be repaid because of the breach. In turn, this could lead to the owner being forced to refinance the property.   

As the rental industry develops and the distinction between lettings and holiday accommodation is blurred, it would seem that the mortgage industry needs to adapt to the diverse needs of the modern world. As it stands, owners of property that wish to use services like Airbnb need to dust off their mortgage agreements, get a magnifying glass for the small print and look for the relevant consent. 

Do mortgage lenders consider the needs of home-owners enough? Are you aware of home-owners that have been affected by similar mortgage restrictions? Do you think that mortgage agreements need to adapt in the future?   

Martin Parrin

Martin is a Senior Content Writer for Today’s Conveyancer, Today’s Wills and Probate, Today’s Legal Cyber Risk and Today's Family Lawyer

Having qualified as a teacher, Martin previously worked as a Secondary English Teacher that responsible for Head of Communications.

After recently returning to the North West from Guernsey in the Channel Islands, Martin has left teaching to start a career in writing and pursue his lifelong passion with the written word.

1 Comment

  • Will mortgage lenders become the number one enemy of home owners once landlords have been sorted?

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