Is Letting Your Property Out for the Festival Worth the Risk?
Renting your property out via short-term let has become increasingly popular, but if it’s something you’re thinking of doing it’s important that you know all of the risks. We turned to Andy Whitmey, Director at Umega Lettings, for his expert advice on the subject.
With the rise of Airbnb and the large number of visitors descending upon Edinburgh for the Festival it is no surprise that renting out your property during August is an appealing option for many homeowners.
During August 2016, headline figures show the average rent for a property marketed on Airbnb in Edinburgh was £2,187 per month, more than double the average of £986 for long term rentals in the capital.
However those looking to increase their incomes by renting out their properties during the month long arts extravaganza may be unwittingly exposing themselves to serious legal and contractual problems.
Make Sure You Don’t Breach the Terms of Your Mortgage
Before you start advertising your property as the ideal festival let, you must ensure that your mortgage allows you to do this. A common misconception is that buy-to- let mortgages will have you covered, however they do not usually allow homeowners to holiday let. A buy-to- let mortgage typically requires that the property must be let through a Short Assured Tenancy, which is a minimum of six months.
A special holiday-let mortgage is required. These are more difficult to get as high-street lenders do not offer them due to the increased risk and uncertainty of holiday lets. These mortgages require larger deposits and will likely charge higher interest rates and fees to allow the lender to manage the increased risk.
Always ensure you have the correct mortgage in place and have your legalities and cover in order. If you have any doubts, speak to an experienced, reputable letting agent. After that you can start to advertise your property to all those who will be descending on the capital for the festival season.
It's the same story for insurance, if you’re venturing into holiday let territory, a standard buildings and contents insurance policy won’t suffice; you’ll need a specific Holiday Let insurance policy and if you do let your property out on a holiday-let basis and you don’t have the right insurance you could be putting yourself in a vulnerable position.
Vetting Potential Tenants
A big problem facing those who opt for short term lets is there is no requirement or guidance on safety standards and very little screening of tenants or guests.
With long-term letting, the legal obligations on the landlord are clearly laid out and the tenant is responsible as the resident of the property. Visitors or guests in holiday accommodation often expect a higher level of service from their host but feel less of a sense of responsibility for the property as they are only staying in it for a few days or weeks.
Unlike those in long-term letting who want to keep the property comfortable and enjoy the decor, those only staying for a limited time are more likely to take less care of their surroundings. Exacerbating the problem, if the property is not well looked-after by the tenant, recovering money to pay for any repairs can be problematic as often the tenant will be living on the other side of the world.
Perhaps the biggest concern for homeowners is that the tenants may decide that they enjoyed staying so much and do not move out at the end of the festival let. Landlords under holiday lets are not under the same protection and legal process as they are with long-term tenancies.
If you are thinking of making your property available for a short-term holiday let or long term letting, we would recommend that you speak to lettings experts such as Edinburgh- based Umega Lettings to make sure that you are in possession of all of the relevant facts and figures. If you have any questions you can contact them on 0131 221 0888, or by emailing firstname.lastname@example.org.