Airbnb – Overnight success or a bad night’s sleep?

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Airbnb is fast becoming the preferred method of accommodation amongst leisure and business travellers.  For Airbnb hosts it can be an easy way of making some extra cash.

However, recently there have been a number of cases where properties have been damaged by guests, sublet by tenants, people being injured at Airbnb properties and hosts left with a lot of clearing up to do.

Nicole Rogers from DAS Law answers the most important questions for existing Airbnb hosts and those thinking of renting out their properties.

Could sharing your rented or leasehold property with Airbnb cost you your tenancy or home?

Millions of Airbnb users may have unknowingly breached the terms of their leases, leaving them vulnerable to legal action or losing their tenancy.

The vast majority of tenancy and leasehold agreements are likely to state that the property in question may only be used as a private residence.  This would prevent tenants from renting out or ‘sharing’ their flat or home for short periods. It should be considered by anyone letting their property out through Airbnb to check their tenancy or leasehold agreements first.

It is not just those renting that should be wary of breaking contracts, mortgage companies may also take a dim view of home owners offering short term lettings of their property. It would be wise for owners to contact their mortgage company before offering their home out, as they may very well be breaking their mortgage contract. Whilst buy-to-let mortgages allow for assured short term tenancy, ‘short-term’ is often defined as 6 months; clearly Airbnb stays are considerably shorter than this.

What precautions do you need to take to comply with health and safety legislation?

Hosts must ensure that the premises are reasonably safe for visitors. With regards to fire safety, landlords should inform visitors of a fire evacuation route. The Regulatory Reform (Fire Safety) Order 2005 makes landlords responsible for taking steps to protect the people using your premises from the risk of fire. This means that a host should carry out a fire risk assessment, if necessary, improve the fire safety measures and keep the risks, and fire safety measures, under review.

If a visitor has suffered an injury at a host’s premises, he/she may seek to pursue a personal injury claim, particularly if the host has breached its duty of care to the visitor, which subsequently has caused foreseeable injury.

If your property or belongings are damaged or stolen, will your home and contents policy cover you?

It is unlikely as the insurer will usually not have catered for paying guests when arranging the policy. The host would need to clarify with their insurer as to whether their cover would be sufficient to cover losses.   Airbnb do offer a ‘host guarantee’ whereby the firm promises to reimburse hosts for damages of up to £600,000, the company adds that hosts should not consider this as a replacement for owners or renters home insurance.

Whilst a host is not required to take out specific landlord insurance, it would be advisable to speak with a specialist broker or insurer to ensure sufficient protection.

What are the tax implications for the income you receive?

Money received from hosting is generally regarded as income; therefore, it is likely that income tax will be payable so the host may need to declare their earnings to HMRC. It is possible that a host may be entitled to certain tax reliefs or allowances, so it is advisable to take tax advice regarding this.

As an Airbnb host, do you need to have public liability insurance?

There is no legal obligation to take out public liability insurance to host via Airbnb. However, it would be worthwhile to do so in order to protect yourself, the host in the event of an injury claim from the visitor.

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Trail of destruction by tenant from hell in Liverpool Echo

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The Liverpool Echo have shown the flip side of the landlord story with a shocking tail of wilful destruction by a tenant from hell.

Click here to see the full article and terrible photos.

The Landlord is Steve Parry, a 55 year old surveyor, who bought two rental properties to supplement his pension and retirement planning. However, the plan went ‘Bad’ for his property in Wavertree Liverpool.

Steve said he had “not made a bean” after the nightmare last tenant who cost £1,500 in court fees to evict leaving more than £2,000 in unpaid rent and at least £6,000 in damages.

The Photos in the Echo show a ceiling that collapsed after a (assumed deliberate) flood in the bathroom, piles of rubbish including bags of dog mess, trashed kitchen and smashed doors.

Steve served notice on the tenant in 2015 as she fell behind with rent and had a large frightening dog that was prohibited under the tenancy agreement.

Steve, in his Echo article, reported: “The house was wrecked, it’s shocking. She had failed to sort the rent out despite numerous promises, so I gave her two months’ notice to quit.

“I was then forced to serve two notice on her, which cost £200 each and she ignored. I had to get an order for possession in court, which I only got in the November. She was supposed to vacate by the 13th December, but despite everything I let her remain on agreement she would leave after the New Year.

“But she refused to move, saying she was looking for a new house. I had no choice but to pay for court bailiffs. She was finally removed this April.”

It was then that Steve found the trail of destruction wrought on his house.

Steve said that although he knew it was unfair to tar all benefits tenants with the same brush, he also could not take the risk again, and knew many landlords were now choosing not to rent to tenants in receipt of benefits especially with Universal Credit reforms forcing tenants to manage their own benefit payments.

He went on to say “people assume you’re loaded as a landlord, but I haven’t made a bean I’ve had that many problems. All I’m hoping is the house value will be more than I bought them for.”

Steve’s final plea to the government was to continue to crack down on bad landlords, but to also redress the balance protecting good landlords from bad tenants.

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Twelve Must-Do things when Letting a Property

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New Landlords:

Are you new to lettings, do you want to rent-out your own home for a time, or have you bought a buy-to-let and you’ve never let one before?

If you are really nervous about doing this for the first time you should think about using a good professional letting agent, one that’s qualified, and a member of one of the key professional associations: RICS, ARLA UKALA, NALS and NAEA etc.

Otherwise, you can save a lot of money by doing it yourself, but you must pay attention to a few absolute basics. If you don’t you could find yourself with a heavy fine, or you will be stuck with a bad tenant, unable to evict, not paying rent and wrecking our property.

This article applies primarily to English law. Although tenancy laws are similar in other jurisdictions, there may be significant differences. Always seek professional advice before making or not making important decisions.

1. Make sure the property is safe – that there are no obvious hazards and that it complies with basic letting rules and regulations. It’s a really good idea to do a simple written risk assessment: www.landlordzone.co.uk/documents
2. You need an Energy Performance Certificate (EPC) before you can market your property. These cost in the region of £100 and last for 10 years. They give an energy rating from A to F, and after April 2018 the overall property rating must be a minimum of E. You must issue a copy of this certificate to the tenant at the start of the tenancy and on renewal.  www.landlordzone.co.uk/directory/suppliers-directory/energy-assessors-2
3. Make sure you have any gas and electrical systems and appliances in the properly checked, and a Gas Safety Certificate issued by a Registered Gas Safe Engineer. Plus the gas appliances must be serviced annually. These certificates last for 12 months, and they must be current at the start of the tenancy, a copy must be issued to the tenant, and on renewal. www.hse.gov.uk/gas/domestic/faqlandlord.htm  There is currently no legal requirement to have professional electrical checks and reports, but this is recommended.
4. Smoke Alarms must be fitted on each level of the property, preferably in the stairwell, along with Carbon Monoxide (CO) detectors in rooms where there are solid fuel appliances – including open fires.  The alarms / detectors must be tested at the start of every tenancy and tenants should have instructions to test and report faults during the tenancy – www.landlordzone.co.uk/information/are-you-properly-alarmed
5. Make sure you have done Legionella checks, especially if the property has been vacant for a period – these are basic checks which can be part of the safety risk assessment – www.landlordzone.co.uk/information/legionella-and-landlords
6. Issue your tenant with the latest version of the Government’s “How to Rent Guide”, a legal requirement: https://www.gov.uk/government/publications/how-to-rent  This document can be served as a pdf. via email if a clause in your tenancy agreement allows for documents to be served by electronic means.
7. Screening and Selecting Tenants. This is perhaps the most important thing you do to make sure you have a successful tenancy. Make sure you do property checks using this 20 point check-list provided by TenantVERIFY: “A 20 Point Checklist – TenantVERIFY® Recommended Checks” – https://www.tenantverify.co.uk/useful-documents.html
8. Protecting Deposits. Since April 2017 all security deposits taken (maximum of one month’s rent) must be protected in one of the Government approved schemes and statutory information (section 213 notice) served on the tenants or any other person that paid the deposit. www.landlordzone.co.uk/content/importance-of-protecting-deposits
9. Inventories. Since the advent of the Deposit Protection Scheme, without a good inventory you will not stand a chance of winning a claim against the deposit for damage to the property. You need documentary evidence to show before and after and ideally an independent inventory company should be used.
   www.landlordzone.co.uk/landlordzone-update/attention-to-detail-in-inventories
10. The check-in. Checking-in a new tenant is a very important process. There a lots of things to remember, so it’s wise to have a check-list in front of you so you don’t forget anything important. Find the Check-in-Check-Out Checklist here: www.landlordzone.co.uk/documents
11. Operating Instructions. You should supply a folder to new tenants with safety and operating instructions and emergency procedures for everything: how to operate the cooker, defrost the fridge, light fires, locate stop taps and electrical fuses, alarm settings etc. Also other information such as when and where the bins are emptied, where post should be forwarded to, and where the local amenities, entertainment, good pubs and restaurants, and transport routes are; this will always be appreciated.
12. Administration. Don’t forget to record all your income and expenses for the year which will be needed for your annual self-assessment tax return. A simple spread sheet will do for this if you have just one or two properties, otherwise think about investing in one of the landlord software packages – www.landlordzone.co.uk/directory/suppliers-directory/software It’s a good idea to keep all the paperwork in one place relating to the property / tenancy and keep a journal which records all communications, dates, times and conversations with tenants.

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