Landlords warned that Airbnb rentals could breach their mortgage terms

Over recent years, Airbnb has become one of the most popular websites for property owners to list their rooms or houses in order to attract holiday lets. With landlords benefiting from lucrative rents for short stays, more and more are signing up to the service which is now available in more than 190 countries.

However, experts have warned landlords with buy-to-let mortgages that they could be breaching the terms of their loan by letting their properties through Airbnb.

Sharp rise in London properties listed on Airbnb

Founded in 2008, the Airbnb service allows homeowners to list rooms or properties for holiday lets. Property owners can attract short-term lets from visitors in order to generate an income, and Airbnb says that it now lists properties in more than 31,000 cities.

In recent years, many landlords have decided to switch from long-term rentals to short-term lets through sites such as Airbnb. While this can potentially increase their property income, experts have warned that letting properties in this way could be breaching a landlord's buy-to-let mortgage conditions.

A report by the Residential Landlords Association (RLA) revealed that there was a 27% increase in the number of London listings on Airbnb between February and June 2016. The number of entire homes or apartments listed on Airbnb in London increased by 24% to 21,861 in June.

However, landlords with buy-to-let mortgages who swap long-term rental for short-term holiday lets are likely to fall foul of their loan conditions, and could face punitive consequences from their lender.

"Most lenders do not allow borrowers to offer short-term lets on their properties, whether on an owner-occupied or buy-to-let mortgage," says Bernard Clarke, spokesman for the Council of Mortgage Lenders (CML).

"That is because lenders accept the risk associated with a particular kind of mortgage – so a loan to an owner-occupier is advanced on the basis that the property it to be occupied by the borrower and his or her family. Similarly, lenders offer buy-to-let mortgages expecting there to be a stable, reliable rental income to enable repayment of the mortgage.

"Mortgage products are based on a careful assessment of risk, including cash flow, the risk of default, the level and reliability of income and any risks associated with how the property is to be used. If the mortgage is then used in a different way, the risks for the lender may be different."

Lenders urge borrowers to contact them before changing their lets

Clarke urged borrowers to speak to their lenders before letting properties through Airbnb or a similar service as they could adversely affect the terms of their mortgage. This sentiment was echoed by leading buy-to-let mortgage lender Virgin Money.

A spokesperson for the lender told the IB Times: "In our terms and conditions it states that any letting must be on tenancy agreement. We request a tenancy agreement to be put in place in order to protect the customer, the tenant and our interest in the property.

"Requests to rent out a property on an ad hoc, short-term basis would not meet the standard buy-to-let mortgage criteria. It is difficult to check whether property is being offered on ad-hoc, short-term lets, but the terms and conditions of a customer's mortgage agreement are made very clear at the outset and there would be a risk on their part to proceed knowingly without talking to us as their lender."