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

NatWest is making its mortgages ‘Airbnb-friendly’, allowing homeowners to rent out their homes on short-term rental websites.

Many people are unaware that renting out a guest room or their home for a few weeks each year can be a potential problem.

Technically, however, there is a good chance that those who do this are in breach of their mortgage agreements.

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

There is a limit of 90 nights per year and they must use an approved rental platform such as Airbnb.

Which mortgage providers can you use Airbnb with?

Ravesh Patel, director and senior mortgage adviser at brokerage Reside Mortgages, says most mortgage agreements do not allow homeowners to use their home through Airbnb.

“When you take out a mortgage for a home, you agree to the terms and conditions set by the lender. One of the most important terms and conditions is that you occupy the property entirely and do not rent it out,” he says.

Although most mortgage providers prohibit short-term rental of your home, there are also providers who allow this, within certain restrictions.

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

Santander allows property rentals with ‘permission to let’, for a fee of £295.

‘A select number of regional building associations are generally also happy with such an arrangement, but they are few,’ says Mark Harris, managing director of mortgage advisor SPF Private Clients.

He adds that some lenders are more flexible when it comes to renting out a room or two in your home while you’re still living there, rather than transferring the entire property.

For landlords, renting out a property through Airbnb can even be a violation of the terms of a rental mortgage, which states that the property must be rented for a longer period of time.

“When you take out a mortgage on an investment property, you are entering into an agreement to borrow money from a lender, on a long-term lease, say 12 months,” Patel explains.

What if your lender finds out you’re using Airbnb?

Even though the chances of getting caught may seem small, the consequences can be serious.

“If you breach the terms of your mortgage, in the worst case scenario it could result in the lender calling in the loan,” Harris said.

‘You may consider asking your mortgage provider for permission to rent out the property so that this situation does not occur again.’

Increase income: Renting out a home occasionally through Airbnb can help cover mortgage payments

In addition to the mortgage, there is also the risk that homeowners will default on their home insurance if they rent out their home for a short period of time, or even just rooms.

For lease holders, there is a good chance that they are in breach of the terms of their lease agreement, so it is worth checking that too.

Here’s what to do if you rent out your apartment through Airbnb and fear you’re in breach of your lease, mortgage and insurance.

Airbnb helps homeowners make ends meet

For mortgage holders who are struggling to pay their monthly mortgage payments, renting out their home short-term through platforms like Airbnb can be a solution to make ends meet.

According to NatWest, the average Airbnb host in the UK earns almost £5,500 a year, enough to cover 69 percent of the average annual mortgage payment.

As families face persistently high interest rates, three-quarters of homeowners are considering ways to supplement their income, a recent survey from Airbnb found.

The survey found that nearly half of homeowners would list their home on a short-term rental platform to cover higher monthly payments, but 40 percent of borrowers say their mortgage provider won’t allow it.

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

‘By adapting our policy, we offer more flexibility and more people can benefit from the advantages of home sharing.’