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Can a buy-to-let be used as an Airbnb?

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    The short-let property market has grown substantially in the past decade as sites like Airbnb make it easier to make a rental income by listing your home online.

    You can rent your existing property while you stay in another part of it or use your buy-to-let property as an Airbnb rental, but there may be consequences for your mortgage payments and you may need to take a specialist Airbnb mortgage.

    Getting a mortgage for an Airbnb from a UK lender can be more difficult and costly than a standard residential mortgage. Make sure you factor in the extra costs, such as a higher deposit and interest rate, when you calculate your Airbnb income and expenses.

    What is the 90-day rule for Airbnb UK?

    In London and some other parts of the UK, there are restrictions on short lets. The 90-day rule states that short-term or holiday-let properties can only be rented for a maximum of 90 days per year.

    Do I have to tell my mortgage lender if I do Airbnb?

    Residential mortgage lenders will want to know if you plan to rent your property via Airbnb because this is deemed riskier than a traditional mortgage. If you decide to turn your home into an Airbnb property, inform your mortgage lender. Many mortgage agreements from UK lenders specifically prohibit short-term rentals.

    If you don’t tell your mortgage provider and they find out you have been renting your property, there could be serious consequences. You may incur substantial penalties for breaching your mortgage contract and be asked to repay your mortgage in full.

    What happens if my lender doesn’t allow it?

    Many lenders are more reluctant to offer Airbnb mortgages because of the fluctuating income, which could make it harder for you to make your mortgage repayments consistently.

    If your lender does not allow you to take an Airbnb mortgage, you will need to remortgage to a lender that accepts Airbnb properties. A specialist mortgage broker can help you find an appropriate mortgage provider.

    What type of mortgage is required for an Airbnb?

    To rent out your entire property on Airbnb, you’ll require an Airbnb mortgage which specifically allows short-term rentals.

    Specialist buy-to-let mortgages

    A buy-to-let mortgage which allows short-term lets is one of the options for your Airbnb mortgage. Look for lenders who don’t just restrict to long-term rental agreements. Mortgage brokers familiar with the short-term let market can help you get an Airbnb buy-to-let mortgage to suit your circumstances.

    Holiday let mortgage

    An alternative to a regular buy-to-let mortgage for your Airbnb property is using a holiday-let mortgage. Mortgage providers who offer holiday let mortgages are used to the fluctuations in rental income and are therefore more accommodating than other lenders when you want to put your property on AirBnB.

    Commercial mortgage

    The third option is to use a commercial mortgage broker to find a specialist lender for commercial mortgages. These mortgages can be used for properties which have a commercial purpose, including those for short-term accommodation.

    Eligibility criteria

    The mortgage process for rental properties is a little different than a normal residential mortgage. When assessing how much you can borrow, a lender will look at the rental property value, also known as the rental yield, rather than your personal income from employment.

    For AirBnb properties, this can be harder to evaluate due to the short-term nature of occupancy, so this causes most lenders to increase the risk profile, imposing stricter criteria for borrowers. You can check your eligibility using an airbnb mortgage calculator.

    Should I be operating as a limited company as an Airbnb host?

    It’s not necessary to be operating as a limited company to be an Airbnb host but if you have multiple properties to rent, it’s possible that having a limited company to own those properties may be more tax efficient.

    Looking to start your Airbnb venture? Contact Simmonds Mortgage Services

    Simmonds Mortgage Services is an experienced mortgage broker who can offer mortgage advice and help you find the right mortgage deal to suit your situation. Some high street lenders may lend to you, but mortgage interest can be high.

    Get your mortgage approved with minimum stress with our help to complete your application. It’s vital to look at the whole market to find appropriate lending criteria and a product without high early repayment charges and expensive mortgage rates.

    As with any new venture, it’s a good idea to consult a financial advisor who can look at potential impacts on your overall financial health.

    Contact us on 01184 693037 or book a meeting today.

    Frequently asked questions about buy-to-lets and Airbnb’s

    Why can’t you use a residential mortgage for Airbnb?

    Residential mortgages often do not allow you to rent your property to others unless you are still living there too. A rental property is a higher risk for a lender than a residential property, so your existing mortgage may need to be adjusted. Many buy-to-let lenders will offer mortgages that can work for you.

    Do you need council permission to run Airbnb?

    At present (April 2024), you do not need council permission to run Airbnb. However, new rules are being drafted to allow councils to impose planning permission requirements on holiday rental properties.

    Do I need a licence for Airbnb UK?

    This can depend on where your property is located. For example, in Scotland, you must obtain a licence to rent on Airbnb. You can find more information on rules and restrictions on the Airbnb website.

    Who else should I inform if I use my property for holiday rentals?

    You must inform your insurance provider of the change of use as more people visiting your property increases the risk of damage and/or theft, so your insurance premiums will probably increase. If your property is managed by a property management company, you should also speak to them.

    Can I get an Airbnb mortgage with a poor credit history?

    If your credit history isn’t great, you may still be able to find a new mortgage which allows you to rent. Specialist lenders will take into account your previous payment history when considering your mortgage application. You would likely be offered less favourable mortgage terms in your mortgage agreement.

    How much can I earn from an Airbnb rental?

    The anticipated monthly rent will depend on the location of your property, how desirable it is for a holiday rental and how many nights per month your property will be occupied. You can check potential income at AirDNA.

    Picture of Andrew Simmonds

    Andrew Simmonds

    Andrew Simmonds is the managing director at Simmonds Mortgage Services. He's been providing mortgage advice to home owners for many years.

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