Does your mortgage provider allow you to take Airbnb guests?

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My mortgage provider is not happy with me having using Airbnb to take in paying guests. They sent me a letter saying that they have be tipped off I have tenants and I am in breach of contract.

I rang my bank and asked for them to send me a copy of the terms and conditions  of my mortgage. I read each point cover to cover with interest and could not find any mention of lodgers, paying guests, or any mention at all of who can or can not live in the house.

What type of mortgage do you have?

In the UK if your buying a property to live in this is treated differently compared to buying to invest, from a mortgage point of view (also from a tax point of view). In the UK a buy-to-let mortgage (investment mortgage) is different from a principal place of residence mortgage (your home). In fact there is no real difference in the actual mortgage contract except some minor wording and usually a higher interest rate for buy-to-let.

To my knowledge there is no such thing as a mortgage for owners who live in their homes but rent out rooms (to lodgers or other short term paying guests). It has been suggested to me that mortgage providers are willing to give permission for paying guests if you ask for it, bus of course asking risks refusal and will undoubtably raise suspicion. Most hosts I assume prefer to keep quiet.

Although taking in paying guests is not new the internet and the Airbnb platform has certainly increased it like never before. I suspect most mortgage providers have not yet fully developed how to deal with this phenomenon.

Airbnb guests do not constitute a tenancy

I rang my bank and they asked me if I had created a tenancy for a room in my house (i.e. drawn up a formal lease). I said I have not. There is no way an airbnb guest sleeping in my spare room for a couple of nights can be classified as a lease.  The bank was happy with my answer and it appears that is the end of it. Some of the research I have done on the subject I have found that banks are not happy with sub-let properties because of the potential problems as it could disrupt a forced sale (in the even of nonpayment of mortgage) as tenants have rights.

 

7 comments On Does your mortgage provider allow you to take Airbnb guests?

  • Did you ever manage to sort out your mortgage and still host on airbnb? I am having issues at the moment trying to find a mortgage provider who will accept airbnb.

    • The short answer is no. I wouldn’t even mention airbnb when looking for a mortgage at the moment. The tough rules in place now make any lending out the ordinary too risky for the banks.

  • I asked my mortgage provider and they have written to say that B and B would be business and that is against their lending policy. Seems harsh. Lender is NRAM (formerly Northern Rock). Perhaps lenders will become more flexible in future, unfortunately not yet it seems. I guess a lot of AirBnB hosts are technically in breach of contract with their lenders.

    • Your right AL. Airbnb is classified as a business and does not even fall under buy-to-let so any mortgage applications will certainly be refused by the traditional lenders.

  • This is kinda scary… I have been renting out flat anytime I’m away (I travel a lot with work) and hadn’t even thought it might be a problem for my mortgage provider. How did they even get tipped off to something like this anyway!? I guess I should probably now have a discussion with my provider too just to be on safe side.

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