The highs and lows of Airbnb.

After George Osborne’s announcement (March 2016) of a £1,000 tax-free allowances for people making profits on short term lets, it’s perhaps not surprising that some of Britain’s big city landlords may view Airbnb as an additional income stream.

For consumers there are lots of advantages: flexible easy bookings in locations ranging from Brazil to Bath, Bournemouth to Borneo. So what’s not to like?

If you’re a private landlord, there’s a lot to consider before jumping into bed with Airbnb:

  • Insurance risk: our panel of AA rated insurers, including Zurich, LV, Aviva, among others, will treat the insurance risk as a holiday let with some restrictions*. This could mean higher premiums, increased restrictions and subjectivities when the property is unoccupied (for example; turning off mains water and regular inspections). Not declaring your letting plans to your insurer could result in claims being refused and your insurance invalidated.
  • Mortgages: The Council of Mortgage Lenders (CML) says Airbnb hosts who offer short-term lets without seeking permission from their mortgage lender are “very likely” to be breaking their mortgage contract*.
  • Customers: Airbnb will cover damages to the tune of £600,000, but their reference checks are limited compared to that of a standard let. Airbnb’s website states it doesn’t protect cash and securities, pets, reasonable wear and tear, or shared or common areas, and offers limited protection for jewellery, collectibles and artwork.**
  • Legal action: Let a property via Airbnb for more than 90 days in London and you could breach planning permission which is a criminal offence.
  • Noise: If guests cause repeated statutory nuisance to your neighbours you could be served with an abatement order and penalised by your local authority.***
  • Increased risk to your property: due to the nature of short term lets your property is likely to be unoccupied more frequently than a standard letting contract. The lets will also be periodical with peaks in holiday months and quieter in winter months when there’s a higher risk of frozen pipes and escape of water.

For those looking to pay off a mortgage or have a regular income Airbnb can be a useful income tool, however, there are additional risks to consider before posting your property details online.

* https://www.theguardian.com/money/2016/apr/02/airbnb-guests-cost-you-your-home-breach-mortgage-terms

**https://www.airbnb.co.uk/guarantee

*** https://www.theguardian.com/travel/2014/jul/08/airbnb-legal-troubles-what-are-the-issues

 

FP810-2016

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Deacon accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.