Here’s what could stop you from renting out your apartment or flat through AirBnB, even if you own it.

June 9, 2020 admin

Renting your apartment or flat out as a through Airbnb, Vrbo etc can be a great way to earn extra income – but it could land you in hot water with your leasehold agreement.

Thinking of renting your apartment or flat out through Airbnb? It’s become a hugely popular and successful way of earning extra cash – and often a very safe way to do so.

There are many platforms that put owners of apartments, or flats, in touch with potential short-term renters, but Airbnb is by far the most popular. With a turnover of $5.9 Billion in 2021, it is clearly a very successful business both for itself and for its members.

Although it might make financial sense to rent out your apartment, doing so may land you in hot water, especially if your lease prevents you from doing so.

Why renting out your apartment or flat on Airbnb can put your property at risk.

The potential issues stem from the nature of land ownership for apartments and flats. The vast majority of flats are owned on a long lease basis. This is where you rent the apartment from a Landlord (or leaseholder) for many years – often 125 or even 999 years – as opposed to ‘owning’ it outright.

(Although this mainly applies to apartments and flats, it’s also worth mentioning that houses can also be owned as a leasehold.)

While AirBnB and others like Vrbo or Agoda have great advice pages and guidance about how to meet its hospitality requirements for guests, unsurprisingly it has far less information about how to make sure you can let out your apartment or flat to begin with.

As a leaseholder, your ownership rights and the obligations imposed for your use of your apartment or flat are set out in a lease and you are, in effect, a tenant – even if you own the property. As the Landlord may be a company or someone not directly involved in running the property, a Management Company can be appointed to ensure things run smoothly and address any concerns you and your fellow tenants may have.

Almost all leases will include a covenant that sets out what use can be made of the apartment. A covenant is a binding, enforceable agreement. The main purpose of such a covenant is to stop apartments being used as offices or business premises that could disrupt other nearby owners.

The wording of such covenants can be “the property is not to be used other than as a private dwellinghouse” (there are numerous spellings of dwelling-house) or “not to use the premises other than as a private residence”. It is these covenants that may stop you letting out your apartment.

How your Landlord can use this against you.

Often, your Landlord or Management Company may turn a blind eye to you letting your apartment out – so long as it doesn’t cause any disruption. However, if you get problematic guests, your landlord could seek to enforce a covenant and prevent you from letting the apartment out at any point, and they may ask a court to determine whether the your breach is serious enough to bring the lease to an end – costing you your apartment or flat.

It is not unheard of for short term lets to bring in more than £15,000 a year. If you are already letting out your apartment, stopping this income may have a dramatic impact on such things as mortgage payments. If this were to suddenly dry up because the Landlord decides to enforce the covenant, the implications can be substantial. However, the cost of losing the property itself will be far greater.

Regardless of what spurs a Landlord or Management Company to look at the situation, if a covenant in your lease is enforced because you are renting out your apartment or flat on Airbnb, you could be at risk of losing your property.

Here’s how we can help protect you, your property and your extra income.

If you think you are at risk, or are considering letting out your apartment, fortunately, we can take steps to fight for you.

To start, take a look at our free guide that will help you understand if you are at risk and what initial steps you can take to minimise the risk of breaching your leasehold agreement.

We are experienced in ensuring you are protected from unexpected enforcement from a Landlord or Management Company so you can benefit from the lucrative short term let market. If you are thinking about letting your apartment or flat out, or are being threatened by you Landlord or Management Company, this is what we can do to help:

  • review your lease and advise on the strength of the covenant, what action your Landlord/Management Company can take against you and the financial exposure to you and any others involved;
  • write to your Landlord to find out what their intentions are and to persuade them that enforcement may not be beneficial;
  • propose certain safeguards that will protect neighbours, including certain safeguards to minimise concerns about disruption as necessary;
  • resist any claims and threats of enforcement through court; and/or
  • deal with any alternative arguments.

The benefit of our involvement is that you get clarity on the situation and the pressure on you is eased. You can then focus on creating a thriving business rather than dealing with threatening Landlords.

Don’t risk your property. Call us on 0333 2400 944, get in touch with us below or book a free 15-minute consultation by clicking here. We can help you understand the risks you face and share what we can do to help.

Importantly, Amgen Law has provided this Insights article for information only and nothing in it should be constituted as legal advice. However, if you would like to discuss any of these issues further about a legal matter that is affecting you, please get in touch with us directly.