Few companies have matched the success of Airbnb in the last decade. The service, which enables anyone to market their property as a lettings space, recently reported that their hosts earn an average of £3,000 a year – a staggering number when you take into consideration that they typically let their rooms or entire homes to guests for an average of just 36 nights. It’s clear to see why Airbnb is becoming increasingly popular amongst landlords and owner/occupiers.
Yet sobering news came from Which? in 2017 – that many UK lenders aren’t pleased about ‘temporary’ or ‘long-term’ stays under the Airbnb platform. Banks across the UK are telling us that renting a property this way breaches their standard mortgage contract.
It is forcing British homeowners and expat landlords on the hunt for mortgages that do accept Airbnb stays, without going the route of a traditional buy-to-let mortgage deal…
The problem, as the lenders see it.
Often, lenders are slow to adapt to developments within the rental sector – the meteoric rise of Airbnb is a case in point. But mortgage providers are dragging their heels to keep up with the idea of casual, semi-residential homes, which allow the owner and various strangers to stay for brief periods of time.
Banks such as Nationwide, Barclays and HSBC are refusing to provide Airbnb mortgages flat out. Others have a 90-day policy, meaning you can host multiple tenants for any combined length up to that period annually before it voids the mortgage. Some high street lenders have stated that they will allow tenancies for 16 weeks of the year, whereas others are asking that homeowners get in touch with them first because they may give conditional consent.
Why is this? Because buy-to-let properties carry more risk. Financing options are, almost always, more complex than those an owner/occupier will experience. Very few are the same. That’s the reason behind an Airbnb mortgage – they are somewhere in the middle, especially when a portfolio grows beyond one place of residency.
Avoid the penalties and get a new type of loan
All of the big-name lenders have stipulations for this scenario, or rule out your Airbnb dreams altogether. Breaching the terms of your contract can swiftly result in higher interest rates for the repayment duration. Otherwise, a fine is issued to deter you from renting again through the digital platform.
But Liquid Expat have established a relationship with a new sort of lender. They have a specially-tailored agreement for Airbnb mortgages. Rates are outlined at 4% for a Loan to Value ratio of 75%, meaning you will have to put up a quarter of the home cost as a deposit. That’s a much stronger proposition than you’ll get elsewhere, for such a specific deal.
Additionally, these agreements line up with any contents or home insurance you’re considering, so you are safe on every aspect. This is crucial when one contract breach can impact the other; you will avoid a mutual nullification. Our specialised lender’s offer also applies to the whole of a property – not just single rooms, sub-letting or ‘your half, my half’ spaces.
We are the only specialist expat broker in the UK to provide an opportunity like this. To enquire about an Airbnb mortgage, speak to a Liquid Expat team member today.