Member Article

Short-term property rentals – points to note

The rise and rise of Airbnb and similar online community marketplaces that allow property owners to rent out their properties on short-term lets has led to many people making use of the facility to earn extra income, or even to operate as commercial providers of accommodation, using the Internet as their main marketing tool.

However, a recent court case highlighted just one of the factors that should be borne in mind when considering putting your property into the lettings market in this way.

It involved the owner of a leasehold property in Enfield, whose right to use Airbnb was challenged in court and found to be contrary to the terms of her lease, which stipulated that the property had to be used as a private residence only. The court considered that the occupation by non-leaseholders on a short-term basis did not show sufficient permanence to constitute ‘residential use’.

This ruling would not normally affect those who let out a room or rooms in their property whilst they remain in it, but it is not the only issue that may arise. There are also potential tax issues, as rental income (unless covered by the Rent a Room exemption) will not only create a liability to Income Tax (or Corporation Tax if the property is owned by a company) but also can affect the owner’s Capital Gains Tax position on an eventual sale.

Adam Oleskow, Partner, Sydney Mitchell commented:

“Many mortgages also prohibit the renting out of a property and require it to be occupied by the mortgage holder only.”

For advice on the legal implications of using your property as a source of rental income, please speak to Adam Oleskow, Partner, Sydney Mitchell LLP on 0121 746 3300 email, a.oleskow@sydneymitchell.co.uk.

This was posted in Bdaily's Members' News section by Linda Heyworth .