If you haven’t heard of Airbnb, it’s worth knowing about so listen up. Set up in 2008, the room letting website is worth more than Hilton Hotels. Valued at $30bn, it’s dealt with 40 million customers and is now looking to expand into the vast Chinese tourist market, making it a force to be reckoned with.
Founded in 2008 by two friends who used their airbeds at their San Francisco apartment as somewhere for local travellers during a local conference, it has expanded to 190 countries in 34,000 cities. But should you think about renting out a room on Airbnb to make a few quid?
Making the headlines
Airbnb can be a great way for many to let out a room or even their entire home as a way of making extra cash. Some have even turned this into a full time job and some landlords are even choosing this method of renting out property as opposed to having full-time tenants with contracts.
And what’s more, a new tax break that comes into play in April 2017 means that those making money from renting out their home will benefit from a £1,000 tax-free allowance. If you choose to make money by renting a room as an overnight-stay or part of it as office space, you can benefit from the new tax law. Dubbed the Airbnb tax break due to the success and fast growth of the company, this incentive could encourage you to rent out that spare room.
Sounds easy, right? Be warned – there’s a few things to consider before you start on Airbnb and you could be breaching your lease.
A recent court ruling
For leasehold homeowners who choose to use the site and rent out their property in part, there is a risk of losing their home due to a recent ruling from the highest property court in the country – the Upper Tribunal (Lands Chamber). The ruling was based on a recent case where an Airbnb host fell out with her neighbours for renting out her home, and the residents asked the freeholder (legal owner of the land and building) to block her.
The reason she lost the case was due to a clause in her mortgage that can apply to leaseholders or tenants renting whose lease states their property is used as a “private residence”. This could prevent some from renting out their property as short-term day or weekly lets. If you live own your own home as a leaseholder and are occupying at least one of the bedrooms, this ruling shouldn’t affect you using Airbnb as extra income. But if you’re letting out a whole property within a leasehold, you could be breaking your contract, and if you are sub-letting a rental property, this is also likely to be breaking your contract.
Know your contract and mortgage
The key message from this ruling is to make sure that if you decide to let out a room, it doesn’t break any clauses in your tenancy agreement or with your mortgage. In any case, check the paperwork, discuss it with your leaseholder, and notify your mortgage lender. Be sure to notify your home insurance provider too, as it could affect your policy cover.
Though Airbnb claim that this isn’t a rule of thumb and that the ruling was a very specific case, you should always double check with the relevant parties involved – whether that’s your landlord, your letting agent or your freeholder.