Thinking of Sub-Letting? Think Again...

Many of us now use short-term lets to pay for our holidays or to make a regular income. As we’re right in the middle of the holiday season, you might be tempted to give it a go. But before you do, think again. Here’s a cautionary tale for renters or leaseholders thinking of using Airbnb or another online platform to make a bit of extra cash. Toby Harman was taken to court in July and was hit with a whopping £100,000 fine for renting out his London flat on Airbnb. He had been renting out his 'cosy studio apartment with a hot tub’ on the short-term lettings website since 2013. Sounds great if you fancy a bijou London base for a spot of sightseeing. Unfortunately for Toby, he was caught out when Westminster City Council discovered the host masquerading on Airbnb as ‘Lara’ was in fact one of their tenants. It turned out that Toby was sub-letting his flat in strict breach of his social housing tenancy agreement. After a failed appeal, he was evicted and told to pay back £100,974 in unlawful profits. This case revolves around the dos and don’ts of social housing but the same rules are likely to apply to any homeowner who doesn’t own their freehold. If you are renting, it goes without saying that your landlord may not be thrilled to find you are sub-letting his property.

The Risks of Short-Term Letting

As tempting as it might seem to make some extra cash, the risks of sub-letting—especially through platforms like Airbnb—are real. The case of Toby Harman serves as a stark reminder of how things can go wrong. Not only can you face hefty fines, but the legal and financial consequences could severely impact your future housing options. Always be mindful that your situation may not be as flexible as you think, and what seems like a quick income opportunity could result in long-term problems.

Understanding Your Tenancy Agreement

Before listing your property on any short-term letting platform, carefully review your tenancy agreement. Many agreements contain strict clauses about sub-letting and using the property for commercial purposes. In Toby’s case, he was found in violation of his social housing tenancy agreement, which prohibited sub-letting. The importance of understanding the fine print of your agreement cannot be overstated.

The Importance of Lease Terms

If you’re a leaseholder, the terms of your lease are crucial. Most leases prohibit using your property for short-term rentals, including Airbnb. This was evident in the 2016 Nemcova v Fairfield Rents Ltd case, where the court ruled against the tenant for listing a property on Airbnb. Always check your lease terms before attempting to sub-let, as breaking these terms could lead to severe penalties.

The Consequences of Breaching Lease Terms

The legal fallout from breaching lease terms can be significant. In addition to being evicted, you may be required to pay back any unlawful profits made from sub-letting. Toby Harman’s case serves as a clear example of what can happen when you violate your tenancy agreement. These legal battles are often costly, not only in terms of money but also in the stress and uncertainty they bring.

Talk to Your Landlord First

Before you decide to sub-let your flat, it’s always best to communicate with your landlord. While many landlords may be open to the idea of short-term rentals, it’s essential to get their explicit consent. Failing to do so could result in legal action. As seen in various cases, including Bermondsey Exchange Freeholders Limited v Ninos Koumetto, most leases restrict commercial use of the property. Even if you think your landlord might be flexible, it’s always safer to have everything in writing before you list your property on any short-term letting platform.