What Do I Need to Know About Holiday Letting (Airbnb)

In Short

• Ensure lease agreements allow subletting or licensing for short-term lets.
• Obtain all necessary legal documentation, including rental agreements, service contracts, and website terms.
• Comply with local zoning laws, health & safety regulations, and data protection laws (e.g., GDPR).

Tips for Businesses

Before starting a short-term lets business, review your lease to ensure subletting is permitted. Get the right insurance to cover potential risks and plan for wear and tear. Consult with an accountant to understand the tax implications and ensure compliance with local regulations and licensing requirements for holiday lets.

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Table of Contents

• Legal Documents Required
• Compliance With Regulations
• Commercial Considerations
• Key Takeaways
• Frequently Asked Questions

Whether you are a landlord or a tenant, you may be interested in providing short-term lets from your commercial property. Also known as holiday lets, you may choose to manage them through providers such as Airbnb or manage them yourself. This type of letting is increasingly popular, and can be a good opportunity for you to offset your rental costs or have an additional source of income. Before you get started, you may be wondering what you should know. This article will cover required documentation, legislative considerations, and commercial points for both landlords and tenants.  

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Legal Documents Required

If you’re a tenant, you can licence or sublet all or part of your commercial space for a short-let business. Alternatively, you may be looking to enter into a lease with the intention of starting this type of business. As a landlord, ensure you have all the necessary documents to operate short-term lets.

Review the basic documentation below and seek legal advice on which applies and how to interpret your documents:

1. Checking your lease: Your existing or future lease will contain provisions concerning the subletting or licensing of your space. This may be permitted without any further conditions or may be fully prohibited. The landlord’s prior consent is usually required, often in the form of a written agreement and formalities. Check if subletting part of the property is allowed if you plan to rent out multiple units from a large space.
2. Short-term rental agreement or licence: You need an explicit agreement with guests covering duration, payment, and responsibility for damages.
3. Service contracts: Engage cleaning businesses for your short-term lets and set agreements to regulate their services and compensation.
4. Website terms: Ensure your website has the appropriate terms in place if you’re handling bookings or managing the lets yourself. This includes any data processing agreement or privacy policy in accordance with GDPR requirements. 
5. Internal/house rules: Consider creating a document outlining client rules, such as guidelines for space use and cleaning responsibilities.
6. Local licenses or permits: Some areas require special licenses for holiday lets. Check with your local council to determine the necessary requirements.

Review the terms and conditions of any third-party management company, like Airbnb, from a legal perspective. These terms outline compliance requirements, dispute resolution processes, and liability for damages.

Compliance With Regulations

If you operate a short-term lets business, there are several regulatory points to consider. This is because the increasing popularity of holiday lettings has led to a push for restrictions from local authorities, and overall has shown that there is a need to regulate this sector. 

You should be aware of the zoning laws applicable to your area. These may state, for example, that you may only offer short-term lets for a set maximum period. They might even be fully prohibited in certain areas. 

Generally, you must comply with health and safety regulations for all visitors to the premises. You should also consider accessibility requirements and whether any reasonable adjustments can be made to accommodate your guests. 

The main consideration will be the use of the property from a regulatory perspective. You should check the use class with the local authority, as operating short-term lets may require planning permission. This process can take some time to complete, and the success of an application is not guaranteed. If your use is considered to fall under the Houses in Multiple Occupation regulations, you may also require an HMO licence. 

Lastly, ensure that you comply with data protection laws, including the GDPR, when handling your clients’ personal data. This even includes collecting names, email addresses, and other information, so it is likely to impact your operations.

Commercial Considerations

Aside from the legal points mentioned above, you should consider whether short-term lets are really suited to your business needs and property. 

Usually, your lease would contain end-of-term obligations that require you to return the property in good condition. Operating a short-term let business from your property may lead to more wear and tear than a simple occupation, so you may want to consider those costs in advance. 

You should also research the tax implications of running this type of business. Preferably, you would obtain advice from an accountant who will be able to present you with different options. 

Discuss the required insurance with your broker, as this may impact your pricing strategy and budget. You may want to consider any management fees payable to Airbnb or any other organisation you’ve engaged.

Key Takeaways

Operating a short-term lets business from your property, as a tenant or as a landlord, can be a lucrative source of income. However, there is some necessary documentation for you to consider in order to avoid costly disputes down the line. You will also need to be aware of regulatory requirements, which typically vary by local area and may render your business operation illegal. Obtaining legal advice can help you determine whether you have all the right documents and safeguards in place. Lastly, you should consider all commercial aspects to ensure that your business is profitable and sustainable. 

If you need help in ensuring that you have the appropriate documents for your holiday lets business, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions