Extra Income From Paying Guests? Up To A Point, Lord Copper.
A case from the Upper Tribunal (Lands Chamber) gives further bad news for English property owners seeking a bit of extra in the form of rental income.
Interest in the booming Airbnb service in England [there are of course several other similar organisations] has created a range of tens of thousands of hosts with rooms or whole properties available and presumably many more owners are considering this possible income earner. Link to Airbnb Here. Link to Daily Mail article here.
There is a tax break available too, the first £1000.00 of income does not have to be declared in income tax returns.
Initially, in England at least, the “early adopters” of Airbnb were people hoping to find holiday makers who would rent a spare bedroom, with or without any meals shared at the family table, whilst having a holiday in the area. An equivalent of “Bed and Breakfast” but usually without the breakfast.
Increasingly the new model is the handing over of a complete property, as a holiday home for the traveller, with no element of home sharing or ability to supervise the occupants’ behaviour day by day.
But, you cannot just join and start tomorrow, if you want to avoid trouble – there are things to do.
By no means an exhaustive list, and in no particular order:-
Planning permission. If you are creating a new guest bedroom in an attic, you will need planning permission for most alterations – link to typical article here- , and Building Regulations compliance in any case in respect of fire safety, alarms and signage.
Also in many areas particularly London, you may need Council permission even if no changes are needed to the property.
Insurance. No. 1. Your insurers should be contacted if you want to be certain that your home cover remains in force in respect of any damage to your home that the new “Guests” may cause.
Insurance. No 2. You may require additional insurance to cover you against liability for any accident or injury your “Guests” suffer falling downstairs, electrocuting themselves using kettles in the bathroom or being attacked by your dog. Or anything bad. [And those injuries might be real, or made up!]
Listed Building? Any works required such as fire escapes, internal signage, new fire doors may well be refused the necessary permissions if your Building is listed.
Mortgage Lenders’ Consent. If you do not own your house outright, then your mortgage lender, Bank or Building Society will have something to say. Most of them will simply say no, and you will risk repossession if you go ahead. The others are likely to increase your mortgage rate as a condition of giving permission. Link here
Landlords’ Consent. If your property is owned on a leasehold then you need not only the consent of any mortgage lender, but probably of your freeholder/landlord also. You need to read the terms of your lease very carefully and once you have done that, I suggest you ask your lawyer to explain to you what the words actually mean.
I am not being more flippant than usual in suggesting that a lay person may not understand the English language. Because, even if your lease is (unusually) written in short and simple words, that does not mean that the meaning is what you think it is.
This is where I began, with the recent Tribunal case. The Lease wording included a tenant’s promise “not to use the premises for any purpose other than as a private residence“. These are not long words but the Court case – which was an appeal from the Tribunal below which was also a trial as to the meaning of the words – engaged a judge and two senior Barristers at least.
You can read it here Link and see that even the meaning of words “private residence” have plenty of scope for ambiguity and disagreement.
So assuming you do need your Landlords’ consent and get it, and get the consent of your lender, and Listed Building Consents, and Buildings regulations are all complied with and planning permission obtained and all new insurance policies put in place, you are ready to go.
What can possibly go wrong?
Apart, that is, from everything you can think of.
There are plenty of horror stories too – here is a sample link.
Here is another link, have a look, just before you take the plunge.
Here is a sad song to cheer you up
And as ever please remember, when you need your papers properly presented for use abroad, book your appointment with us, at AtkinsonNotary [0113 816 0116 or firstname.lastname@example.org or www.atkinsonnotary.com ] where we shall be more than happy to assist.