The way people use residential properties short term is changing. Websites like Airbnb, OneFineStay, and Gumtree have cropped up offering accommodations for people across the world through other people offering their own properties to use, whether that’s a room for a night like what people may imagine a traditional bed and breakfast to be or through using the whole property for a few weeks’ holiday and it becoming more of a hostel or holiday use.
Websites like these work on trust and self-policing, similar to eBay in that users have profiles and reviews that they will want to protect and develop for future use and therefore will behave themselves accordingly. Other times it’s more offline and friends-of-friends or people within a similar community or interest group helping each other out with leads.
As well as being quick and easy and with no middlemen, these short-term arrangements can be profitable, with the rates adding up cumulatively to more than a traditional letting on, say, a 6-month AST.
Here are 10 particular concerns regarding these forms of occupation. These are useful and can be applied to all kinds of interests with this form of short-term rent-a-room-type accommodation, whether you’re a property owner looking to do this for your place for additional income, whether you’re an occupier wanting to travel the world and use space in this way, or whether you have another related interest such as a management company in a communal development or financial interest where these issues are affecting you.
So here goes—10 property-related tips to bear in mind:
1. Lease and Title Restrictions
If you have a short-term AST agreement, for example, of a residential flat yourself, then it’s probably a definite no-no to share in this fashion, but even if you ‘own’ it on a long 999-year lease, there may be a restriction in that as well, as was the case I was recently involved with where these long leases were part of a communal development.
Therefore look through the whole document, including the use and ability to share occupation, and take legal opinion on any general references that restrict things now even though the original lease was drafted maybe 30 years ago when this form of more temporary occupation was never even dreamt of. Even with freehold ownership, it may be worth checking any related covenants, although it is less likely for this type of ownership.
2. Planning Permission
This is not only needed for any major building works—something you’re probably not going to do for this type of temporary use—but also possibly any ‘change in use’ and the nature of it turning into a paying-business model like a traditional B&B or guest house. London in particular has been a concern; however, recent changes now allow 90 days of the year as temporary sleeping accommodation without triggering a formal change of use.
Bottom line—check with your local council if you’re getting serious about this.
3. Council Tax
Similar to planning matters, check with your local council for the implications, particularly if you’re getting serious into and even have a change to the business rates scheme. In some extreme cases like holiday lets, an owner may be better off changing to the business-rates system than the residential council-tax one.
Check any mortgage or secured lending arrangement at a property about the ability to allow this form of occupation. One extreme is that a new buy-to-let-type mortgage may be needed, or on the other hand, simply notifying them about what’s happening might be necessary.
Remember that any superior landlord or management company not happy about this may officially notify the mortgage company of the breach, with a threat of legal action to resolve.
Now that you’re in the realm of payments, there may be tax implications for people receiving hosting money and needing to declare to HMRC, although tax reliefs and allowances may be due in your own circumstances, for example, the “rent-a-room” allowance if your main residence. If you’re an occupier, then consider what costs you can treat as expenditure items against your tax calculation.
Here’s a helpful blog on how this fits in with the UK system.
6. Insurance Cover
Check both the buildings and contents insurance as to any requirements and restrictions for other uses. If this is arranged by your landlord or management company, then check with them, although remember that bringing the subject up will probably raise all these other issues as well. Be clear on what actual personal and furniture items are covered by the main occupier’s insurance or the insurance of the person staying over.
7. Health and Safety
Here’s a helpful blog post from SHP on the issues surrounding fire regulations in particular, the bottom line being that there could well be a liability that the ‘host’ has in providing fire and other general health and safety protection whether through existing property-related legislation or consumer protection legislation.
A Risk Assessment is ideally needed to look at these to be on the safe side and to clarify what roles people need to take in this.
8. Resident Manuals and Procedures
Watch out for the day-to-day matters and manuals/procedures for dealing with this issue, particularly with any communal developments. It’s amazing how many things you take for granted when you live there regularly, but with temporary occupiers, everything is completely new, for example, access with fobs, where to park your car, and where to take your rubbish.
Any new occupier can innocently cause frustrations and become a nuisance (including in the legal sense) and can trigger things like fines and recharges. Get them understood, get a nice, easy ‘guide’ for them, and then actually talk through it to make sure they’re understood.
9. Unique Terms and Conditions
If you are going through a website like Air B&B, then wade through their T&Cs, or if more ad-hoc, then see if anything is implied or confirmed in writing, including a formal tenancy or licence agreement. If things go pear shaped, whether deliberate or not, this will clarify what happens, for example, cancelations, accidents and damage, and even issues of people’s security and privacy.
For those with an account on some of these websites, they will want to protect feedback and reviews and therefore will more readily resolve problems and see things through.
10. Other interests
This is pretty broad really, so anything from other occupiers or family members using the place to practical arrangements like dog walkers, babysitters, post and delivery men, plus utility-meter readers. There are also suppliers like gas, electricity, water, telephone, Internet, and TV providers and accounts. These could all be affected by these uses, whether access issues to the property itself or someone racking up high costs for another person.
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