Renting out your property can be a fun and profitable venture for many hosts (including Airbnb Superhosts) but you must stick to the mortgage rules (writes Howard Reuben, Principal, HCH Financial Services).
When you let a mortgaged property on a short-term rental basis, you must be adhering to your lender's criteria. So, what type of mortgages allow you to let via Airbnb, or any other short-term rental platform, like Booking.com or Vrbo?
Generally, you will have a range of options depending on your circumstances, including:
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Residential mortgages
Buy-to-let mortgages
Holiday let mortgages
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But which one is right for you? And are you eligible for that type of mortgage contract?
To be clear, there are no specific mortgages for Airbnb hosts – but there are mortgage terms and conditions with all contracts which mean you are either allowed or restricted from renting out your property on a short-term rental basis. Holiday let mortgages will allow you to let a property on a short-term rental basis, while some buy-to-let products will allow short-term stays, potentially for a limited number of days each year. Residential mortgages, meanwhile, are likely to require you to obtain lender permission before you are allowed to let a room in your property or your entire home on a short-term basis.
Expert brokers – like the team at HCH Financial Services – can help you to find the best rates and deals without breaching any terms and conditions.
What type of mortgage will I need?
The exact type of mortgage you will need to make your property available via Airbnb or similar platforms will depend on several factors. For example, if you are planning to let your own home, bear in mind that nearly all residential mortgages include a condition that states the property cannot be let without obtaining the lender's permission (and lettings via Airbnb would come under this exclusion). Some residential mortgage lenders will charge more for an Airbnb arrangement, while others will refuse it altogether.
Word of warning: if you proceed to let your property on Airbnb without informing your lender and/or insurer, this could be a costly mistake. Anyone who cuts corners is likely to be in breach of their mortgage contract – and this can automatically invalidate home insurance. If your lender finds out your property is being let in breach of mortgage terms, you are at risk of having your home repossessed or being asked to repay the mortgage in full. Failing to inform your insurance provider, meanwhile, could compound the problem – and the potential financial losses could be massive if any guest damages your property.
Be aware, also, that tax authorities have recently invested in powerful new technology that creates a full profile of taxpayers from external sources, including Airbnb and eBay. The chances are that 'corner cutters' will be spotted. We also know of letting agencies who have been contacted directly by HMRC and instructed to provide a full list of all landlords on their books. Cross-referencing against platforms such as Airbnb is not hard for tax investigators who undertake only minimal due diligence.
This is not a doom and gloom article. It is simply a real world way of saying: do things correctly from the outset and you too can have a fun and profitable business where you (and your guests) sleep well at night.
For all your short-term rental mortgage needs and insurance advice, get in touch with HCH Financial Services today:
Call: 0333 1234 536
Email: advice@hchfs.com
Visit the HCH Financial Services website
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