Are you tempted to join the tens of thousands of people making a little extra income on their property though websites like Airbnb?

Letting out a room or your entire property while you are away on a regular basis is surely a win-win situation; you get some income for that spare room and your guest gets a good deal.

If you own a leasehold property have you stopped to check that you may be breaching your lease?

Brady Solicitors look at how leaseholders may be unknowingly breaching their lease and risking their properties as a result of the recent trend of subletting their rooms online.

Check the lease first

Your lease is the first document you need to check to see if there are any restrictions on subletting. The clause should refer to subletting or may state you cannot ‘part with possession’ of the property without the freeholder’s consent.

This does not mean you are forbidden to sublet, you may just need to get permission from the freeholder first. The freeholder may refuse this request, or they may grant permission but could charge you for subletting the property.

You have permission – what else do you need to do?

Before you start listing your property online, you may need to check the terms of your mortgage to see if you need permission from your lender to sublet.

Providing both your lender and freeholder have agreed to let you sublet the property, you will also need to notify your insurance provider. This is because the possessions of guests may not be covered under your current insurance agreement.

What if you don’t have a mortgage?

Even if you own the leasehold property outright, the lease may still prohibit you from subletting so you will still need permission from the freeholder.

If you do have permission from the freeholder to sublet you will only need to ensure you have the correct insurance in place before listing your property online.

Leaseholders in London also need to be aware that they cannot let out their property for more than 90 days a year under the Greater London Council Act 1973.

Consequences of breaching the lease

If you let your property in breach of your lease you ultimately run the risk of forfeiture. This means the freeholder can bring forfeiture to proceedings under section 146 against you. Forfeiting the lease means you lose your leasehold interest in the property.

In order to protect yourself from forfeiting the lease you may seek to retrospectively obtain the freeholder’s consent to sublet. Consent from the freeholder should not be unreasonably withheld.

Failure to make the breach right may also result in forfeiting the lease, so it is wise for leaseholders to make sure they permission from the freeholder.

A reminder to leaseholders

Making extra money from your leasehold property is tempting and whilst there may be thousands of others subletting their properties without the freeholder’s permission, you need to question if it is worth the risk of forfeiture for the extra income.

Freeholders are increasingly aware of websites such as Airbnb for subletting properties and are increasingly prepared to take action against leaseholders breaching their lease. Brady Solicitors advises leaseholders to look at the lease in detail before commencing on any subletting activities.

As leasehold law experts Brady Solicitors can help you understand the terms of your lease if you are looking to sublet or need advice on your current position if you are subletting the property. Call us on 0115 985 3450 or send us an email.