Expats renting out homes in Britain on short term lets through web sites like AirBnB face lenders hiking up their mortgages and even calling in the loans.
A survey of mortgage lenders found that only one – the Market Harborough Building Society – would consider agreeing to short term letting and only then if permission was asked in advance.
The building society will allow short term letting for 24 weeks in any year but may put up interest to buy to let rates.
A survey of other leading lenders showed only two others would agree to short lets – the TSB and Santander.
Santander is not keen on giving permission and charges £295 for every request from a borrower.
Ban on letting without permission
The Council of Mortgage Lenders (CML), the trade body for banks and building societies, explained that standard mortgage contracts typically had a clause banning letting of a home without consent given in advance.
“Some lenders may allow some letting depending on the circumstances, but not to run a business,” said a spokesman.
“The rule generally applies to buy to lets as well as owner occupiers.”
If a home is let without permission, the lender could call in the mortgage, leaving the owner with a massive bill.
Mortgage lenders are not the only financial institutions not keen on short term lets.
Standard home insurance would not provide cover if a stranger was living in part of the property.
Tenants are also barred from sub-letting buy to let homes by clauses in rental agreements.
Lawyers say several cases relating to AirBnB and subletting are before county courts.
AirBnB terms and conditions also point out to anyone advertising a property to rent on the web site that the £600,000 damage guarantee offered by the company is voided if any third party with rights over the property has not given prior permission for the rental.
These third parties would include mortgage lenders, insurers and landlords.
The CML explained the risks involved in short term lets.
“Most lenders would be worried that the borrower might not be able to pay the mortgage if they moved out and could not find a tenant,” said the spokesman.
“Lenders and insurers would also be worried about what would happen if a tenant f=damaged or destroyed the property.”