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Can I Make Money Out Of My Home By Renting It Out?

View profile for Sara Garnett
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With the increasing popularity of  Airbnb and the ability to offer your home on the internet as an alternative to hotels, many of you may be wondering whether you can make money by letting your home when you are not there. In addition to the practical considerations, such as vetting the prospective occupiers and ensuring that you are covered by your insurance for any damage, there are also a number of legal issues which you will need to consider.

Does My Mortgage Prohibit Me From Letting My Property?

Unless you have a “buy to let” mortgage it is likely that letting your property, even on very short term arrangements, will be a breach of your mortgage and could enable your bank or building society to require you to repay the mortgage in full.  You should check the terms and conditions of your mortgage very carefully to see what you can and cannot do.

Can My Landlord Stop Me From Letting My Property?

If you have a leasehold property it is likely to contain a number of restrictions (known as covenants) which restrict what you can do at the property.  This is the case even if your lease is for 999 years.

A covenant which is commonly imposed is “not to use the property for the purposes of any business”.  Another is “to use the property as a private dwelling only” or to use it “only as a private residence” and is sometimes further restricted by specifying that the private dwelling is to be used “for the occupation of one family only”.

Although the courts will determine each case on their own facts, they have previously ordered that taking in paying lodgers or granting short term lettings where the occupier would not consider the property as being their home, have breached these covenants.

There are also likely to be restrictions in the lease either preventing you from granting any underleases, specifying what type of arrangements you can enter into or requiring the prior consent of your landlord.

Are There Any Similar Restrictions On Freehold Properties?

You will need to check the covenants which affect your property as they may contain similar restrictions on use as those mentioned above.  When builders sell houses they have built on an estate, they usually impose a number of covenants which will bind all of the properties in the same way. 

What Can I Do?

If you are considering letting your property in this way but are not sure whether there are any covenants which would prevent you from doing so we have a number of property experts at Tilly Bailey and Irvine who will be able to consider your lease or title documents and explain in plain English what they actually mean. In addition, our Corporate Team will be able to advise you on the terms and conditions of any contract you intend to enter into, either with an agency or directly with the proposed occupiers, to ensure that you know exactly what is expected of you and what you can expect from them.