Landlords Beware: The Rise of Airbnb Unlawful Sub-letting

Airbnb, FlipKey and HomeAway are three well-known short-term rental platforms in the UK; and there are many more. Users can list their properties to earn money whilst they travel or rent out a spare room or second home. Whilst the benefits from the guest’s perspective are clear (a cheap and homelike option in comparison to a hotel), many opportunistic tenants are taking advantage of their landlords by unlawfully sub-letting these properties.

Last month, the BBC Inside Out (London) reported on this growing epidemic. In particular, it documented the case study of a landlord who ended up £10,000 out of pocket after his tenants sub-let his property in Bloomsbury on Airbnb.

The tenants had an Assured Shorthold Tenancy (“AST”) for 22 months arranged by Base Property Specialists Limited. As a routine part of the AST and with the consent of the tenants, the agent carried out periodic inspections. On this occasion, the agent arrived slightly early. He saw the tenants showing a family around the property. On returning to the office, the agent checked Airbnb to find the property listed as both a single dwelling and two separate bedrooms. There were more than 70 reviews for the property dating back to the start of the tenant’s tenancy.

The agent wrote to the tenants putting them on notice of various breaches and asked them to urgently: (i) remove all listings from Airbnb and/or any similar sites, (ii) cancel any future bookings, (iii) remove the key safe they had installed and (iv) to make good any damage they had caused.  The tenants were also offered two options: to re-occupy the property themselves for the remainder of the tenancy or to surrender under the tenancy’s early termination provisions.

The tenants remained at the property, removed the key safe and repaired the damage as requested. However, the agents continued to receive reports from neighbours of people coming and going. It soon became clear that the tenants were still hosting the property via Airbnb. The agents reported the issue to Airbnb whose response was allegedly to ‘take it up with the tenants’. The landlord was therefore left with no option but to serve a Section 8 Notice and to issue court proceedings.

The unlawful hosting of property in this way creates several alarming issues for you, including potential breaches of:

-Mortgage and building insurance terms;
-Licensing laws; and
-Short-term let and HMO licensing laws.

These breaches can have serious repercussions, including repossession, a prosecution in the Magistrates Court (where fines are unlimited), a penalty charge notice and the right for your tenants to apply for a Rent Repayment Order (although we do not think that a court is likely to be sympathetic to a tenant in these circumstances).

How can you prevent this?

Unauthorised short-term letting is a growing threat for the private rented sector. Property owners, landlords and agents, therefore, need to do all they can to prevent such misuse and breaches.  This could include extensive referencing, educating tenants about the terms of their tenancy from the outset and, most importantly carrying out regular property inspections. Also, make sure you have a well-drafted tenancy which prohibits sub-letting. It is expected the BBC’s report will put Airbnb under some pressure to ensure greater checks as to ownership of the property are carried out before a property can be listed. We will keep you updated if there are any changes you should be aware of.

If you would like advice about how to safeguard against these issues or if you have tenants breaching the terms of their tenancy, please get in touch and we would be happy to help.