Think twice before letting out spare rooms in your house

Read the small print before sealing the deal
Airbnb seems to offer easy money for those with spare rooms to let out. But be aware of the rules.

Airbnb celebrated its tenth anniversary this summer. The website, which offers people the chance to let a room or their whole property to paying guests on a nightly basis, now offers space in more than five million homes across more than 81,000 cities and 191 countries.
Thousands of people earn extra cash by renting out their property on Airbnb. UK hosts raked in £657m in the year to July 2017, an average of about £3,000 each. But those who fail to adhere to the small print in mortgage, insurance or rental contracts may find that sharing their house becomes an expensive mistake.
Check local restrictions…
Firstly, it’s important to understand how the rules work where you live. Some cities have laws restricting your ability to host paying guests for short periods. In some places you’ll need to register or obtain a licence before you list your property or accept guests. In London you can only let your entire property for up to 90 days a year. If you want to rent it out for more than three months, you’ll need planning permission from your local council.
If you’ve got a mortgage, you may be breaking your mortgage terms and conditions by letting your house on Airbnb. Many lenders don’t allow properties to be used for short-term letting as it means you’re using your house to make money, not as your residence.
Nationwide, for example, won’t permit a property to be let on Airbnb if it is the owner’s only residence. Letting your whole house is also likely to be a breach of mortgage terms with other major lenders, such as Royal Bank of Scotland and Santander. If you have a buy-to-let mortgage, the terms are likely to specify that the property must be let on an assured shorthold tenancy, with a minimum term of six or 12 months, not on a nightly basis.
Not all lenders take such a hardline approach, though. Tipton & Coseley building society recently launched a new mortgage product aimed at borrowers looking to short-let their properties. Metro Bank allows customers with residential mortgages to let their properties for up to 90 days each year.
The situation is slightly different if you continue to live in your house and let a room, rather than your whole property, to short-term visitors. Most lenders allow you to take in lodgers on a standard residential mortgage – but check yours carefully before you let someone move in.
… and your insurance small print
You may also run into problems with your home insurance if you let your property on Airbnb or another house-sharing platform. Insurers base the cost of your premium on the number of people living in your house, so you need to inform your insurer if other people are going to be living there too. If you rent your house, you’ll need your landlord’s permission to sublet a room, even on an occasional basis. Failing to get permission could be breaching your tenancy contract. Owners of leasehold flats should check the terms of their lease – many leases will specify the property can only be used as a residential dwelling, not for commercial purposes.
Finally, if you do rent out a room within your property, you can take advantage of the government’s Rent-a-Room scheme. This allows you to earn up to £7,500 tax-free each year by letting out a room in your property. If you let your whole house out on Airbnb, you can earn up to £1,000 a year before you begin paying tax.

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