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The Pitfalls of Property Sharing

April 26, 2017

Nearly 80,000 British homeowners earn supplemental income through the use of property sharing services, such as Airbnb. However, by letting out available rooms, these homeowners may be breaking or even invalidating the terms of their leases or mortgages as well as their insurance policies, according to a ruling from the Upper Tribunal (Lands Chamber).

In general, most leases have a condition that states that the property cannot be used for any purpose other than a private residence. This means that by letting out available rooms to paying guests, leaseholders could be in violation of that condition and at risk of breaking their lease.

Even if you are allowed to let your property, you could still be unknowingly jeopardising your insurance policy if you do not alert your insurer about your plans to host, as they could invalidate your cover. Whilst some property sharing services provide a ‘host guarantee’ should something happen whilst a guest is renting the space, it should not be treated as a replacement for home or tenants’ insurance. In general, these guarantees do not protect hosts’ cash and securities, pets, reasonable wear and tear, or common areas. In addition, it only offers limited protection for jewellery, collectibles and artwork.

If you are seriously considering letting out your property through a property sharing service, be sure to first review your lease or mortgage to see if you are allowed to. Most importantly, though, you should contact Howden to verify whether you are covered in the event of a potential claim. If you are not, discuss what amendments you can make to your policy in order for you to be protected.

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