Happy Holiday lets!

The festive season is here and everyone is (hopefully) winding down for the Christmas period.

You might be having family staying over for the next few weeks if you have the space… or the patience…. and there’s clearly nothing wrong with that but people who regularly let out a room in their home or even an investment property as a holiday let, may need to check their mortgage conditions or lease to ensure that they aren’t in breach. What may seem like a good source of regular income could be detrimental to your property!

More and more people are looking to websites like Airbnb and HomeAway to let out their properties on short term holiday lets but owners need to be very careful they don’t fall short if they have a lease and/ or a mortgage in place.

When it comes to leasehold properties is often that there will be a clause in the lease saying that the property must only be used as a single private dwelling. Existing case law confirms that this means that a leasehold owner is not prevented from letting the property on an assured shorthold tenancy. In the case of Nemcova v Fairfield Rents Ltd (in 2016) the court ruled that granting a short-term holiday let was in breach of the tenant’s covenant to use the property only as a private dwelling. It was noted that this case was fact specific and each case will depend on the wording in the lease but leasehold owners should be very cautious when going down this road.

In the case of a property which is mortgaged, the Council of Mortgage Lenders has advised that owners who offer short term holiday lets without seeking permission from their lender could well be in breach of their mortgage conditions. This can even apply to buy to let mortgages as most lenders do not like short term lets and prefer to have assured shorthold tenancies for a term of not less than 6 months. We suggest you check your mortgage conditions carefully if you are thinking about letting your property on a short-term basis. If you are already using your house/ flat for short term holiday lettings then you should certainly consider letting your lender know. It is unlikely indeed that lenders are checking every property individually to see if they are being used as holiday lets but if they become aware of this its likely you would get an initial warning letter- followed by proper legal action if it is ignored.

This is still an evolving area of law and there is likely to be further caselaw on the subject. We suggest that if you are thinking about using your property for short term holiday lets that you consider the above and also such issues as insurance and planning. Will your insurance policy cover lettings and do you need planning permission from the local authority for what you want to do? Get in touch with Guest Walker if you would like to get specific legal advice on the clauses in your lease or if you are considering purchasing a property that may be used for short term holiday lets.

 

Merry Christmas and a Happy New Year from everyone here at Guest Walker!

Ava Krajniewski

Trainee Solicitor at Guest Walker
Ava joined Guest Walker in 2017, having previously worked as a Paralegal at a large commercial law firm in Leeds. Ava completed her law degree in 2012 and has now completed her Legal Practice Course at the University of Law in Leeds. She currently assists John Walker on various commercial and residential transactions and provides general support to the commercial property team.

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Ava Krajniewski

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