airbnb short-term lets

Mortgage breakthrough for Airbnb hosts could offer buy-to-let alternative

The short-term holiday let market received a boost yesterday with the launch of a new mortgage created specifically with Airbnb hosts in mind.

Until recently, hardly any UK lenders would permit borrowers to rent out rooms on Airbnb without their consent, with many forbidding short-term lets entirely.

Airbnb allows homeowners to rent out rooms or their whole property via its website, and there has been a significant increase in this service as some landlords look for alternatives to the traditional buy-to-let.

Lenders have been reluctant to support Airbnb hosts

Until now, lenders have been conservative in their response to borrowers wanting to supplement their income by renting out part or all of their property. Barclays, HSBC and Nationwide would all refuse to permit borrowers to be Airbnb hosts, while Lloyds and Metro Bank limit the days or weeks it allows, and RBS, Santander and Virgin Money would only consider authorising it with prior consent.

However, even with permission from their mortgage provider, borrowers granted permission to offer rooms as Airbnb hosts are often subject to higher interest or additional fees. As a result, some borrowers might have been tempted to go ahead without permission, meaning they are officially in breach of contract and risking a demand for immediate repayment of the mortgage in full by their mortgage lender.

Airbnb hosts given the green light

Tipton & Coseley Building Society’s new mortgage permits borrowers to rent out their properties on shorter or non-fixed term agreements – supporting Airbnb hosts and landlords that want to rent out rooms in their home for short and ad-hoc periods of time.

Available to those buying a second home or holiday let and those looking to remortgage, Tipton has also introduced greater flexibility on overall income, considering holiday let income where there is a proven track record. The mortgage is available with a maximum loan-to-value of 75%, and landlords should note that properties with occupancy restrictions (e.g. holiday park properties) will not be considered.

This new mortgage deal paves the way for other lenders to relax their restrictions on short-term lets, which is positive news for homeowners and landlords looking to leverage income from their homes.

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