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Leasehold apartment holiday let

Know your rights before buying a Leasehold Apartment to Holiday Let

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Leasehold apartment holiday letAre you considering purchasing a leasehold apartment to holiday let? Although it’s quick and easy to make a listing on the ever-growing list of rental websites; in reality there are a number of steps you should take before buying an apartment and opening your doors to paying guests. Whether you intend to let for a limited number of weeks to help with costs or to provide a more regular income you should ensure that you can comply with the terms of your lease. Have an appropriate mortgage and suitable insurance for holiday letting.

Does your lease allow you to let your property?

From insurance to your lease and mortgage agreements, we take a look at what you’ll need to be considering and the action you should be taking before letting your property…

The implications for leasehold properties

It’s estimated there are tens of thousands of leasehold properties currently listed on AirBnB and similar holiday rental sites. However, an extremely common clause in any lease is that the property must be for “private residence” possibly prohibiting the subletting of the property for short periods.

So what does that mean? In essence if you were to holiday let the apartment and your lease included this or a similar clause, you’re in breach of your lease. As a result you could face the consequences should your freeholder choose to take issue with it. These could include and extend to your landlord asking you to cease holiday letting and potential legal action.

A recent ruling in the Upper Tribunal (Lands Chamber), which is the highest property court in the land, has supported this stance. In this particular case one resident in a block of London flats fell out with fellow neighbours by letting her property on AirBnB and a range of other similar sites. When others in the block became disgruntled by her actions they asked the landlord to take action, with the case subsequently going to court.

Take legal advice to ensure the apartment is suitable for holiday letting

With a legal precedent now set, if you own a leasehold apartment and are wanting to holiday let it you should first check your lease. For those considering purchasing a leasehold apartment to holiday let it’s vital you check the terms of your lease before committing to buy. Seek advice from your solicitor and be upfront with them and the estate agent regarding your intentions to holiday let. In many popular holiday areas across the UK apartments are springing up. Some new build apartment blocks are intended for use as second homes and holiday lets. Those that are should have appropriate leasehold wordings to allow holiday letting. However do double check and seek advice.

The implications for second homes purchased with a mortgage

So does the above leasehold scenario extend to a property purchased with a mortgage?

The answer really lays in the agreement that you have with the lender. If you’re intending to let your second home to paying guests it’s important you have the right mortgage. Either:

  • secure a mortgage that allows this type of letting from the outset, or alternatively
  • consult with your existing agreement to ensure that it’s not prohibited.

Seek advice from your mortgage adviser who’ll be able to guide you through your options. They’ll provide advice to ensure you comply with the lenders requirements and source a loan to match your needs. Taking the right advice should be both cost effective and tax efficient.

Getting your holiday letting insurance right

When people visit and stay in your home they bring with them a unique range of insurance requirements. These far outreach the standard household buildings and contents policy cover you’d usually have for your home. For example:

  • what if one of your guests has an accident in your property?
  • What if you’re unable to let your property for any period of time as a result of an incident?
  • Would you be able to pay the legal fees should there be a claim made against you?
  • Does the freeholder’s block policy for the buildings insurance include cover for your fixtures and fittings?

These are all areas that could cause distress and expense were you not to have the correct insurance cover.

When holiday letting your second home to paying guests it’s essential to take advice on suitable insurance. Boshers offer specialist holiday home insurance to holiday letting owners across the UK. Need an insurance quote for your holiday letting apartment? Please give us a call on 01237 429444.

 

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You, your holiday let apartment and your insurance

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You, your holiday let apartment and your insurance.
When purchasing an apartment to holiday let, you’ll rightly focus on the return on investment. As part of this research you’ll establish that there is sufficient demand for an additional holiday let in the location of your choice. As with any business decision it is important to stand back and let your head rule your heart! It’s important to avoid the following pitfalls:

If you are using a mortgage to finance your purchase make sure your mortgage provider is aware of your intention to holiday let the property.

Check with the freeholder / managing agent that there are no restrictions on the use of the property that will prevent you from letting it for short term holidays.

Likewise check with the freeholder / managing agent that the buildings insurance policy for the apartment block includes property owners liability for the shared areas and that holiday letting is an acceptable use of the apartments by the insurer.

At this point it is also wise to check if the buildings insurance extends to cover fixtures and fittings within the apartment such as fitted bathrooms, kitchens, and fitted bedroom furniture and wooden flooring and if so is accidental damage included? In our experience the buildings insurance for many blocks of flats and apartment blocks does not extend to cover the fixtures and fittings within the apartment and certainly not in the event of accidental damage.

Now that you have established the above, how can Boshers help?

We can provide you with a Holiday Home Insurance Contents Policy for your apartment to include cover for:

  • Your general contents
  • Fitted kitchens, bathrooms, bedrooms and flooring
  • Property owners liability insurance for commercial holiday letting

It is important that you insure for the correct replacement value, remember in the event of a claim your contents will be replaced on a new for old basis, therefore your sum insured must be sufficient to replace everything at the recommended retail price. Likewise with fitted kitchens, bathrooms and bedroom furniture you must insure for like for like replacement including the cost of installation and debris removal.

Follow this link for posts similar to `You, your holiday let apartment and your insurance‘ and other useful resources for holiday home owners

For further information on UK holiday home insurance visit the website page most relevant to you:

Thank you for reading `You, your holiday let apartment and your insurance‘.

Should you have any queries or require a holiday home insurance quotation for your commercially let second home or apartment call us on 01237 429444 or visit us at www.boshers.co.uk/holiday-home-insurance

 

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