Is Airbnb against your mortgage rules? NatWest now allows short-term rentals… but many don’t

NatWest is making its mortgages “Airbnb-friendly” so homeowners can rent out their homes on short-term rental websites.

Many people don’t realize that renting out a spare room or their house for a few weeks a year can be a potential problem.

However, technically there is a high chance that those who do so will breach their mortgage agreements.

NatWest’s rule change applies to both new and existing customers.

They will be subject to a limit of up to 90 nights per year and must use an approved rental platform such as Airbnb.

Which mortgage lenders allow you to use Airbnb?

Ravesh Patel, director and senior mortgage consultant at broker Reside Mortgages, says most mortgage agreements do not allow homeowners to use their homes on Airbnb.

“If you accept a residential mortgage, you are agreeing to the terms set forth by that lender and a key condition is that you will fully occupy that property and not rent it out,” he says.

While most mortgage lenders prohibit renting out your home on a short-term basis, some allow it within certain restrictions.

Nationwide allows up to 18 weeks per year, while Barclays and Metro Bank allow 90 days annually, with a limit of 30 consecutive days.

Santander allows properties to be rented with “consent to let”, subject to a fee of £295.

“A select number of regional building societies are also generally happy with this type of arrangement, but they are few and far between,” says Mark Harris, chief executive of mortgage broker SPF Private Clients.

He adds that some lenders are more flexible when it comes to renting out one or two rooms in their home while you continue to live there, rather than handing over the entire property to you.

For landlords, renting a home on Airbnb could even breach the terms of a buy-to-let mortgage, as the terms stipulate that the home must be rented out on a long-term basis.

“If you take out a buy-to-let mortgage, you’re entering into an agreement to borrow money from a lender, based on a long-term rental agreement, say 12 months,” Patel explains.

What happens if your lender finds out you use Airbnb?

Although the possibility of being discovered may seem remote, the consequences could be dire.

“Failure to comply with the terms and conditions of your mortgage could, in the worst case, lead to the lender withdrawing the loan,” Harris adds.

‘You might consider obtaining a ‘consent to let’ from your mortgage provider to avoid this situation occurring.’

Increased income: Occasionally renting out a home on Airbnb can help cover mortgage costs

In addition to the mortgage, there is also the danger that landlords will breach their home insurance policy by renting out their home on a short-term basis, or even just rooms.

As for tenants, there’s a good chance they’re breaking the terms of their lease, so it’s worth checking that out too.

You can find out what to do if you rent out your apartment on Airbnb and fear you may be breaching your lease, mortgage and insurance here.

Airbnb helps homeowners make ends meet

For mortgage holders currently struggling to make their monthly mortgage payments, renting out their home short-term through platforms like Airbnb can help them make ends meet.

The typical Airbnb host in the UK earns almost £5,500 a year, enough to cover 69 per cent of the average annual mortgage payment, according to NatWest.

As families face the constant prospect of trying to keep up with high interest rates, three-quarters of homeowners are thinking of ways to supplement their income, according to a recent Airbnb study.

It was revealed that almost half of homeowners would list their home on a short-term rental platform to cover increased monthly payments, but 40 per cent of borrowers say their mortgage provider does not allow them to do so.

Lloyd Cochrane, head of mortgages at NatWest, said: ‘At NatWest we want to support our customers by expanding their choice across our proposition, including sharing their homes through sites like Airbnb.

‘By updating our policy, we will offer more flexibility and allow more people to take advantage of the benefits of home sharing.’