Airbnb and mortgages

Furnished serviced accommodation has become a very popular investment over the past few years. Driven somewhat by the taxation changes on standard buy to let, serviced accommodation or furnished holiday lets are still taxed under the old regime, and borrowers can offset all of the interest payments. Add to this that a greater income can be generated I can see a strong movement of investors towards the sector. Of course, Air BNB is a popular medium for attracting visitors to the property. Specific mortgages allowing holiday letting must be obtained, and I feel there will be an expansion of the sector over the coming years; both for investors and allowing those wishing to rent out their home short term to supplement their income.

There are currently very few lenders that allow any type of short-term letting on a borrower's own home. Where this is in place, it's normally restricted to certain loan-to-value products and usually 90-120 days of letting.

It's an enquiry type that we have seen a rise in recently, however it does pose a problem for lenders as it blurs that boundary between residential and commercially focused products.

Using Airbnb effectively isn't as simple as taking a few photos and creating a listing. Take the time to understand the platform - that means the risks involved, as well as the potential benefits.

Make sure your lender is aware and has given prior approval. There will also be implications with home insurance policies, so there are many factors to consider to ensure you're set up correctly.

Buy to Let is very popular and one strategy that has gathered pace is Airbnb lettings where properties are let out on a short-term basis and even if there are void periods it can be more profitable than a standard let.

However, there are only a limited number of lenders in the market that cater for this and although the number of lenders is increasing, there are still only a few and each has its own criteria rules that may or may not fit with the applicant's needs. Most mainstream lenders tend to attract vanilla business and I feel they are missing a trick by not entertaining Airbnb mortgage applications. They should also consider allowing homeowners with residential mortgages to let some of their rooms on an Airbnb basis which would provide a supplement to their income and would be popular with these borrowers.

A bit like a classic British car, this looks like a great idea until you try to get it to work! Airbnb sounds like a great idea to make extra cash but many will end up realising that this is not a "simple" way to earn more money. Mortgage lenders do no like Airbnb as it introduces additional risk to their security and frankly they know that many people go into this without fully understanding risks. For example most standard house insurance policies will not cover Airbnb activities so a specialist policy will be required or short-term policies to cover the periods of letting.
Then there is the tax implication, especially if the whole property is let out rather than just a room. In addition to a self-assessment return many may need an accountant to help with their return.