Residential mortgage provider that allows Airbnb/a bit of B&B?

[StickyProblem]

We are buying a former B&B, we want to buy it as residential (easy enough, fill in a form for the planning dept) but do a bit of Airbnb or a few days of B&B in high season. My longterm high street mortgage provider said it isn't allowed for any of their residential mortgages.

Is it really such a weird thing? I've been all over the internet and it seems that if you do B&B in your home and your residential mortgage provider doesn't allow it, they can stop your mortgage and charge you the termination fee, and you have to go and get a commercial mortgage. We'd be happy to move to a commercial mortgage and pay business rates etc in the future IF we decided we liked doing B&B and it was a viable business, but we don't want to commit to it now.

You'd think with the rise of Airbnb some of the lenders would have thought of this. Perhaps I should go onto every single bank's website and look there, or call them all, but I am hoping to avoid it. I was in with my bank for 2 hours going through all the mortgage stuff, then they emailed 3 hours later to say "no, sorry, don't allow B&B", massive waste of time when it's a "yes/no" answer.

I have a broker looking and after 3 days he says he's "finally got ONE lender that MIGHT be interested"!

Any advice/experience would be greatly appreciated! Does anyone have a residential mortgage that allows a bit of B&B?

[PetraDelphiki]

My suspicion is that any lender who will let you will have punitive mortgage rates so unless you do more than a few days it won't be worth it!

[bearbehind]

I suspect the reality is that most people who do AirB&B don't tell their mortgage provider or insurance company.

Probably seems harmless enough until things go wrong.....

As above, it's likely that if you try and do it all above board the cost will make it unviable.

[StickyProblem]

Thanks Petra... you may be right. Especially if there's only one that deigns to do it!

This is why I asked on MN.... I'm hoping someone's "normal" residential mortgage allows for it in the T&Cs. Might end up having to call all the banks though....

[StickyProblem]

Bearbehind thanks, I think you may be right. All it needs is for the banks to decide to clamp down on it and people will be in the crap.

[bearbehind]

When you think about it you can see why lenders and particularly insurance companies wouldn't be happy with it without imposing some kind of financial levy on it.

It's likely that older mortgage T&C's might not mention it at all as its a fairly recent thing but any new borrowing would be covered by much more explicit T&C's.

[StickyProblem]

Bearbehind I can understand the risk is greater so mortgage providers want to charge. I'm hoping I can find a provider where it's a modest charge rather than a doubling of the interest rate!

I heard of something called "Consent to Let" where the lender allows some form of subletting for payment of an admin fee (£40-100). This is what my bank originally thought it would count as, but they emailed later to say No.

Having investigated Consent to Let, it seems more about when people work away for months/years and let the place out. Which is a completely different thing - with much greater risk of squatters for a start. Surely having someone to stay in your home for a few days while you are still in it is considerably lower risk than that.

There are about 45,000 places available with Airbnb in the UK - is every single one fully owned?

[Wuffleflump]

There was an article about this in the paper the other day www.theguardian.com/money/2016/apr/02/airbnb-guests-cost-you-your-home-breach-mortgage-terms

They mention different rules of specific mortgage lenders.

[MyKingdomForBrie]

Airbnb has a blanket insurance policy covering damage of up to £1m so the banks probably aren't too fussed about that one, standard bnb though I can definitely see their point, especially as you want to 'try before you buy' - doesn't work like that in this kind of business. Who is to say what your idea of a few guests is, even a few guests needs extra insurance etc etc..

[bearbehind]

The granting of consent to let varies massively between lenders; some just charge a one off fee, some an annual fee, some impose an interest rate hike, some limit the duration, some do all the above.

[StickyProblem]

That's fantastic wuffleflump, thanks so much, exactly what I was after. How did I miss it? Been obsessing about this perhaps I did my major searching last week.

Thanks Brie. There are loads of ways a mortgage provider could define "a few guests", could be a cap on nights let out per year, or money earned. Interesting that airbnb is a special case that's in some ways better than "normal" B&B. Happy to get everything insured etc, just want to as you rightly say "try before buying", not setting up a business plan, commercial mortgage etc.

[nattiness]

Evening all, just wondering if OP found a solution to this quandary? In a similar situation myself and wondering if I'll have to do a lot more research into the business to prepare for a commercial mortgage application.