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Getting on board with Airbnb

Getting on board with Airbnb


Anyone thinking of advertising their property on the holiday rental site must be made aware of the legal issues and obligations surrounding it, advises Tessa Shepperson

Unless you are one of the top 1 per cent of earners or have massive inherited wealth, you probably feel the pinch from time to time, so the prospect of a few extra hundred pounds from renting out your home for a couple of weeks is probably an enticing one. Hence the popularity of Airbnb.

However, what are the legal issues which arise for clients wishing to act as Airbnb ‘hosts’? As I see it there are three areas to consider:

  • Whether they have the legal right to rent out the property in the first place;

  • The type of occupation granted; and

  • Their legal rights and obligations.

Can they rent?

  • Planning: This is particularly relevant for London as there are restrictions on renting out a property for more than 90 days on temporary accommodation. There may be similar restrictions elsewhere. If the property is a house in multiple occupation, planning permission might be required;

  • Long lease restrictions: Tenants may be breaching the terms of their lease if they are not using the property as a ‘private residence’ – if the lease contains a clause of this nature. In the case of Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC), the Upper Tribunal held that living in the property for only a few days a week did not give the necessary ‘degree of permanence’ to satisfy the requirements of the lease. So always check what the lease says. Breaching its terms can have very serious consequences, including forfeiture of the lease itself; and

  • Other restrictions: You should also check the client’s mortgage deed and insurance policy to make sure that they are not in breach of any of the terms. If the HMO rules apply, they may also need to get an HMO licence from their local authority.

What occupation type is it?

This depends on the nature of the letting, but the options are:

  • Lodger-type lets: If someone rents out a room in their home while they are still living there, so that they share living accommodation, this will be a licence;

  • Assured shorthold tenancies: If the whole property is rented out, then it will almost certainly be a tenancy. If it is for a permanent residence it will usually be an AST;

  • Unregulated or common law tenancies: If the tenancy is for the purpose of a holiday then it will be an unregulated tenancy, as will short lets which are not for a holiday but where the tenant is not using the property as their ‘only or principal home’. It will also normally be an unregulated tenancy if someone lives in self-contained accommodation in the same building (e.g. if they rent out a ‘granny annex’);

  • Other tenancies and licences: If someone rents out rooms in the property separately but does not live in it themselves, then the rooms will be tenancies if they have ‘exclusive occupation’ or licences if they have to share with strangers (e.g. in hostel or dormitory-type situations). The rules for tenancy types will be the same as for a whole property; and

  • HMOs: A property will be deemed to be an HMO in all situations where more than two people share living accommodation where they are not one ‘household’ (e.g. if they are not family members). So, for example, three friends sharing a flat will be an HMO. This applies to both licences and tenancies, so renting out several rooms in your own home can turn it into an HMO.

Legal rights and obligations

There is only space for a very quick overview here. All lets will need to be safe and will be vulnerable to local authority inspections under the housing health and safety rating system and, if there are category 1 or 2 hazards, service of an improvement notice which they will need to comply with or risk prosecution.

All properties need to have a gas safety certificate. An energy performance certificate may be required, particularly if there is a tenancy, but certain furnished holiday lets may be exempt, and an EPC is not required for room rentals.

All tenancies will be subject to the landlord’s statutory repairing obligations under the Landlord and Tenant Act 1985, but licences will not. However, if the property is in disrepair, this may constitute breach of contract in licence situations.

Unless the property is a holiday let, the landlord will need to carry out a right to rent check before the tenant or licensee goes into occupation (but note that this does not apply in Wales). In this context, the holiday let exemption will not apply if the property is let for more than 90 days. Penalties for renting to occupiers without a ‘right to rent’ include a fine of between £80 (for lodger landlords) and £3,000 (for repeat offences regarding tenancies) and, after December 2016, a custodial sentence.

For tenancies, smoke alarms must be fitted on all floors and carbon monoxide alarms in any room used as living accommodation where solid fuel is used. These must be in working order on the first day of the tenancy (again, these provisions only apply in England).

If the property falls within the HMO rules, whether or not an HMO licence is required, it will be subject to the HMO management regulations. These include, on top of the rules for ordinary tenancies, requirements regarding cleanliness, disposal of rubbish, fire safety, and five-yearly electrical inspections.

What happens if the occupiers refuse to leave? The host’s rights here will depend on the type of occupation it is. If the occupiers are lodgers or on a holiday let, they can be evicted without a court order so long as no violence is used.

Otherwise (even with a licence) the host will need to get a court order. There are different procedures which depend on the occupation type:

  • Licensees are evicted via a special procedure which is used for claims against trespassers (as a licensee will be a trespasser if they remain after their licence has been revoked);

  • Unregulated tenants can be evicted after service of an old-style ‘notice to quit’, after which they will have no defence to a claim for possession; and

  • Assured shorthold tenants can be evicted under section 21 of the Housing Act 1988 (and note that new rules came into force in England under the Deregulation Act 2015 on 1 October 2015 which include service of gas safety certificates and EPCs and also the government’s ‘How to rent’ booklet).

It is very easy to rent a property using Airbnb. Although users have to click to confirm they agree with the terms and conditions, which include a requirement that they comply with local laws, it is doubtful whether many take this in. Airbnb, to do it justice, has information and links to government information sites in its help section; however, it is doubtful whether many ‘hosts’ will actually read this or think it applies to them.

I suspect that many hosts simply do not consider these things at all, leaving themselves vulnerable to prosecutions by the Health and Safety Executive under the gas safety regulations; prosecutions by local authorities under the HMO management regulations, the fire safety regulations, and the general safety regulations; and prosecutions by the Home Office under the right to rent regulations.

Airbnb is very popular and is part of the new ‘sharing economy’ taking over the world. It has undoubtedly been a great boon to many people who are able to earn an income from their homes, which has made their lives easier.

However, it is not a ‘magic button’ which releases them from compliance with the various landlord regulations, most of which are health and safety related. It is just another way of advertising a property.If you are in the position of advising anyone thinking of renting their property out using Airbnb, you should warn them that they need to take good care that they comply with all the rules, otherwise (as magistrates’ court fines are now unlimited) their new-found prosperity could be short lived.For more on the risks to lessee- or tenant-landlords from AirbnB, see Riccardo Calzavara in Solicitors Jounal Property Focus Autumn 2016 (SJ160/40)

Tessa Shepperson is a lawyera nd blogger on landlord and tenant law