Jonathan Lynn, property disputes partner writes that most long leases will contain a clause preventing sub-letting of the whole property or of part of the property without permission , usually with a condition that sub-letting will not be blocked by the freeholder unreasonably. Frequently there will be clauses preventing any use other than single occupation by one household.
There have been a number of recent cases dealing with the question of whether short term Air BNB lets breach these types of conditions. The answer is clear, they do. So, if you are thinking of letting your leasehold property or one of the bedrooms through Air BNB then you can only do it legally with the permission of the freehold owner/management company etc. So what, you might think. What can they do about it? Well they can in some circumstances get an injunction to prevent a lease holder using Air BNB and any other form of short let. An injunction was granted in Bermondsey Exchange Freeholders Limited v Kevin Geoghegan Conway. Mr Conway was ordered to pay the costs of the Freeholders.
Even if you are a freeholder then there are restrictions on your ability to let your home on Air BNB. If you have a mortgage then it is very likely that your mortgage contract forbids Air BNB type arrangements. You might be able to get permission from a lender but many have made it clear they will not allow such use of the property and those that are willing will restrict the use and probably charge a fee to agree to the let. If a homeowner were to engage in Air BNB lets without the mortgage lender’s permission and the lender found out then they could take a number of steps. They could impose a charge, increase the rates or ultimately (although not likely) demand payment of the balance in full.
If you are a freeholder who owns the property outright, surely you can let you property through Air BNB without any problems. Well, perhaps, but you should check you insurance policy.