Property News - Time To Switch To Short Stay Lets ?

It's Offical !

Airbnb To Support U.K. Wide Council Registration Of Short Stay Lets In 2020

Airbnb has announced that it will be in talks with politicians across the UK on the proposals for a clear, modern and simple registration system for short-term rentals in UK cities.

Starting on 26 September, Airbnb will begin a 6-month roadshow of major cities across the UK to meet with local government policymakers.

Airbnb will put forward proposals for a registration system in a white paper that will be presented to the government in 2020.

A competent registration scheme would weed out leasehold apartments operating without the necessary permissions & insurance in place, so reducing competition for legitimate short stay properties.

A good step for existing short stay operators would be to join the new Visit England Accreditation Scheme. this is a simple entry level scheme showing basic permissions are in place along with health and safety measures for your short stay property.

Want to be one of the winners when regulation enters the market email us to discuss in more detail. >>>>>>

 

General Election 2019 - Regulation & Planning Constraints on 'Airbnb' Lets Are On The Way ?

It appears almost certain that both the Liberal Democrats & Labour parties would Introduce a new use class in the Planning “Use Classes Order” for “Non-Permanent Occupancy Properties” , which would enable local councils to determine how many, or what proportion of homes may be second/holiday homes.

They would also introduce a stronger statutory definition on which to apply appropriate tax, entitlement, voter registration and other health and safety policies on holiday let properties.

A high percentage of city centre leasehold apartments would not qualify for this new planning status as they would require the authority of their Freeholder / Management Company, which in most cases would not be given. 

Act Now - Be In Front Of The Game

Less competition due to new regulation would increase the yields for those freehold serviced blocks and properties which are eligible for the correct planning status.

Landlords with freehold or compliant leasehold, holiday  / short stay lets would be wise to take all steps to protect their future right to run their commercial short stay property;

 

 

........................................................................................................................................................

 

Many 'Airbnb City Apartments' Are Breaking The Terms Of Their Leases.

It's simple - You cannot let out your leasehold apartment on a short stay licence agreement If your lease prohibits it :

  • Prohibits running a business from your leasehold apartment
  • Prohibits any use other than a ' Private Residence '

 

Recent legal case illustrating this :  Nemcova v Fairfield Rents Ltd UKUT 303 (LC).  

Landlords thinking of entering the short stay market should not go to the cost of setting up a fully furnished and equipped property, only to find that they could well be prohibited from operating by their leasehold management or local council.

 

 

 

Many 'Airbnb Apartment Landlords' May Not Be Adequately Insured & Subject To Potential Liabilities

  • There are short stay management companies currently operating that are misleading their clients by managing apartments for a short stay use knowing they do not have the proper authority or permissions in place - so putting their client's at risk. Would you run a holiday let or B & B business without proper Public Liability Insurance in place ? I think the answer is you would be mad to operate such a business without insurance to cover your liability to guests in case of injury or worse.

  • Health and safety issue  

  • If you let the property as a landlord, you would be obliged to comply with health and safety laws. If you are a leaseholder with a long lease, and decide to let the property as holiday accommodation, the health and safety laws would apply to you as you would be considered to be a landlord under the law.

  • The Regulatory Reform (Fire Safety) Order 2005, s.3 states that the responsible person for complying with the Order is the person who has control of the premises (as occupier or otherwise) in connection with the carrying on by him of a trade, business or other undertaking (for profit or not). Airbnb is a holiday let and the leaseholder would be carrying out a business which means that they would need to comply with the Order.

 

  • Insurance
  • In most leasehold flats it is usually the freeholders’ obligation to take out insurance to cover the entire building, and the leaseholder may choose to secure its contents by obtaining contents insurance.
  • Leaseholders must make sure that if they intend to let their property as a holiday let on Airbnb, their insurance is not invalidated by so doing. Airbnb states that it offers Host Guarantee and Host Protection Insurance, but  “this does not take the place of homeowners or renters insurance or of adequate liability coverage.”
  • Lease

(a) Change of use

  • There have been a few decisions which have discussed the issue of whether the use of premises to let on Airbnb is in breach of any clause in a lease which restricts the use of the property as a private residence only or prohibits carrying out any business in the premises.

  • One such example is the recent case of Nemcova v Fairfield Rents Ltd UKUT 303 (LC). The lease in this case stated that the leaseholder was “not to use the premises or permit them to be used for any illegal or immoral purpose or for any other purpose whatsoever otherwise than as private residence.” The Upper Tribunal decided that the clause prohibits all other uses save as a private residence. The clause did not state that the premises are to be used as the private residence of the lessee or the occupier, but as “a private residence”. In other words the clause in the lease would not be breached if the occupier for the time being is using it as his or her private residence. The motive for the occupation and the acceptance of payment is immaterial. What is important is the duration of the letting. Judge Stuart Bridge held that “…for the property to be used as the occupier’s private residence there must be a degree of permanence going beyond being there for a weekend of a few nights in the week.” The lessee in granting short term lettings for days and weeks rather than months had breached the clause in the lease to use the property as a private residence only. 

......................................................................................

 

All Landlords Will Have To Satisfy The Courts That They Need Possession Of Their Rental Property !

 April 2019

The government says it wants to ban outright Section 21 'no fault' eviction powers in England and Wales.

Instead landlords seeking to evict tenants would have to use Section 8, which can be implemented when a tenant has fallen into rent arrears, has been involved in criminal or antisocial behaviour or has broken terms of the rent agreement, such as damaging the property. The government says it will amend Section 8 to allow it to be used by landlords if they want to sell the property or move back in themselves. Unlike S21, tenants can challenge S8 evictions in many cases.

......................................................................................

 

Labour Party Calls For Rent Capping 

January 30, 2019

Short Stay and Holiday Lets are not legally residential tenancies, they operate as a business and are not seen by housing legislation to be a main residence. Landlords are increasing exploring the short stay sector

The mayor of London has stated that he is considering introducing rent controls across LondonSadiq Khan announced that London needed to adopt a “strategic approach to rent stabilisation and control”, since the arguments in favour of capping rent inflation are becoming “overwhelming”.  “I have long advocated such reforms; in 2013, I suggested reforms could give renters the right to longer-term tenancies and predictable rents. The housing crisis is now having such an effect on a generation of Londoners that the arguments in favour of rent stabilisation and control are becoming overwhelming.”The proposed changes include ending section 21 “no fault” evictions, which the housing campaign group Generation Rent said have been the leading cause of statutory homelessness since 2012. “This law allows evictions with no reason needed, and this is one more reason why we should scrap it,” the group said.Assured shorthold tenancies, the standard rental agreement for almost all renters in England, should be replaced with open-ended tenancies – providing greater security of tenure to renters, according to the draft blueprint. Currently, landlords are able to evict tenants immediately after the initial fixed term, usually six months, without a legal reason.
 

Increasing Letting Cost For Landlords 

January 30, 2019

In direct response to the Tenant Fees Bill, the majority of letting agents are increasing their commissions for both letting and managing rental property. Agents can no longer rely on tenancy sign up, referencing or administration fees charged to tenants, and an already over competitive sector has no option but to increase their charges to landlords. Many of the larger agent groups are now advertising management commissions at 13 and 14 % plus other increased re-let fees. 

Certainly some landlords are seeing the writing on the wall and selling their investment properties and leaving the private rented sector, and are keen to invest in other sectors such as  Commercial Property and Holiday Lets.   

 

Landlords Right To Automatic Possession Being Eroded Away

 January 30, 2019

Back to the future ? ...yes looks like the political will is returning to one of increasing tenant rights and controls over the private rented sector. In the 1988 Housing Act was born the Assured Shorthold Tenancy Agreement and Section 21 that gave a landlord an automatic right to gain possession back of his/hers investment property. These two things fueled the growth of the private rented sector allowing lenders to give mortgages to investors knowing there would be no risk of potential sitting tenants ( which would devalue the capital value of the property).
 
This landlord's automatic right to get tenants out of a rental property is slowly being eroded away...No fault evictions...or loss of right from a number of administrative mistakes are now in evidence, and further a call to completely abolish Section 21 is growing in political circles.
 
Short Stay and Holiday Lets escape this growing risk of semi-sitting tenants being left in a rental property, and increasingly property owners are wanting to invest in this sector.
 

Tenancy Deposit Capped - Damage Costs Will Be Controlled

 January 30, 2019

 

Private renters are set to benefit from new measures reducing the amount tenants have to pay up front to secure a home from 6 weeks’ rent to 5 for annual rentals of under £50,000.

The move, announced as part of the Tenant Fees Bill, is a further step by Communities Secretary James Brokenshire MP towards ending costly fees imposed on tenants when they first move into their property - creating a fairer housing market that works for everyone.

Around 1 in 3 renters who currently pay a deposit are set to benefit from the change - saving tenants £64 million in the first 12 months by keeping more of their hard-earned cash, while also making sure landlords are able to recover costs in the event of damage to their property.

The new cap will apply to properties where the annual rent is less than £50,000. A deposit of 6 weeks’ rent will continue to apply where the annual rent is £50,000 or more.

Other amendments to the Bill include protecting tenants from unfair fees by limiting the type of default fees that can be charged by landlords and property agents.

This change means that during the tenancy landlords and agents will only be able to charge fees to replace lost keys or for late rent. Landlords will still be able to claim back costs for damage through the tenancy deposit at the end of the tenancy. However, landlords and agents will not be able to write lots of different default fees into a tenancy contract and tenants cannot be charged hundreds of pounds for a damaged item that actually only costs a few pounds to replace.

Deposits however can still be charged for short stay and holiday lets and reasonable charges for breakages charged to guests subject to terms and conditions. Further with weekly cleans in place property owners can maintain and keep their properties to an excellent standard.

New Legislation Prevents Charges To General Let Tenants

January 20, 2019

The Tenant Fees Bill sets out the government’s approach to banning letting fees paid by tenants in the private rented sector and capping tenancy deposits in England. The aim of the Bill is to reduce the costs that tenants can face at the outset, and throughout, a tenancy, and is part of a wider package of measures aimed at rebalancing the relationship between tenants and landlords to deliver a fairer, good quality and more affordable private rented sector.

Tenants will be able to see, at a glance, what a given property will cost them in the advertised rent with no hidden costs. The party that contracts the service – the landlord – will be responsible for paying for the service, which will help to ensure that the fees charged reflect the real economic value of the services provided and sharpen letting agents’ incentive to compete for landlords’ business.

The ban on tenant fees is intended to come into force on 1 June 2019.

The government will shortly be publishing guidance for tenants, landlords and letting agents to help explain how the legislation affects them.

Submit an enquiry