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Is this true? AirBNB classified as Trade or Commercial?

Hello Guys,

I own an apartment and sublet it full time via AirBNB. The service management company of the building (SMC) email twice that i have breached the lease and that what i am doing is Trade/Commercial.
Clause:
“carry on or permit upon the Demised Premises any trade or business any
trade or business whatsoever or suffer to be done on the Premises any other
thing…whereby any insurance effected by the Lessor under this Lease may be
rendered void or voidable”

Someone advised the following:

Emma is advertising the Flat for short term let on the AirBNB.
This website allows consumers to search and book short-term stays at properties across various worldwide cities.
Property owners advertise their properties on AirBNB with a view to
charging people for staying for short periods in their property and thereby
making a profit. Therefore, as i am is advertising the Flat to let for a fee, it is arguable that this activity would constitute both the selling of a service (I.E. access to the Flat) and a commercial activity (I.E. charging a fee for staying at the Flat).

Therefore advertising his flat for let on Air B&B, i am allowing the Flat to be used for the purposes of carrying on a trade
or business as prohibited by the Lease.

Any comments? true? i was very sure it was not true.

Thanks in advance.
E

What country and state are you at?

Sorry. Forgot to mention, i am from the United Kingdom
UK

Do you own it or lease it?

I cannot see how doing this full time is not a commercial activity.
Because you are not living in it, and the only purpose of you having it, seems to be making money.

1 Like

I own the apartment, its is a leasehold for 340 years.

Yes, but then i also make money if i LET it out to someone for 6 to 12 months.

Buy-to-let is a British phrase referring to the purchase of a property specifically to let out, that is to rent it out.

It is the practice of buying a house or apartment in order to make money by renting it to someone else, and not so that you can live in it yourself.

But on the lease, i am allowed to rent it out to one for a max 3 years per tenant.

Sounds like you need a solicitor!

are you acting within the terms of your lease? I cant understand all the cut and paste and half phrases. Are they making a legal distinction between short term and long term ? Maybe you need to share the entire lease, and also any building restrictions that might surperseed lease terms. I dont understand ( in usa ) owning a leasehold.

How are you subletting if you own the place? Are you paying rent?

Subletting is when a tenant lets to another tenant.

yes youre right.
i own it. but i put the whole apartment on airbnb.

what would that classify as? it is not trade then…

The problem is the definition of “owning”.
The place is leased, not bought. So most people would define that as not owning, because the landlord owns the place.

I am familiar with the phrase “Buy-to-let”.
But in this case it is “Lease-to-let”.

I do not know what the lease contract says, about commercial activity.
And if you are allowed to make big profit out of subletting.

No, it is buy to let. lease to let is office. These residential leases. I own the lease to the apartment, the freeholder owns the building. In the UK lease to let is classified as commercial and it is not to be mixed up with my situation.

1 Like

Well you have answered your own question. Your lease allows you to rent to one person at a time for a minimum of 3 years. If what you have said is correct. Although being very familiar with UK renting and letting agreements, yours seems really weird and very constricting. But if that is what is says, and you bought the property for the sole purpose of short term lets, its would seem you overlooked this bit in the legal pack.

It is a bit of a grey area … You are right, it’s not subletting as you are the owner, but the freeholder has the right to set the terms of use. Whether it counts as trade is a moot point … since letting on a shorthold tenancy wouldn’t be counted as trade. We are freeholders of a small block of flats and certainly wouldn’t prohibit Airbnb letting as long as concerns about noise, security etc were addressed.

There is no intrinsic legal reason your lessors should ban it but basically they can if they want to! I think you need to persuade them that you are aware of all the issues and that short-term rental will be no more prejudicial to them than normal rental. With regard to their (the Lessor’s) insurance being voided, you could assure them that you will put in place your own insurance for any eventuality that may occur.

I am sure you are not alone in this dilemna … it’s the problem with the UK leasehold system. Do find yourself a solicitor with experience in leasehold property to help you.

1 Like

We have some leasehold in Hawaii. Large landholders hold leases to many rural or farming areas. The leases are usually written for 99 or so years. You can build homes on their land but you have to follow the terms of their lease, and sometimes this means you have to actually be farming, and they come and check. Plus you need to show them books and records of your farming activities, and give them a cut. It’s your house but not your land. So when the leases are up, sometimes the homeowners just let their homes or buildings “return to nature.” This is why on Hawaii Island you see lots of abandoned shacks in rural areas.

Of course England is different, but it sounds to me like your leaseholder disallows commercial activity on the property; they have deemed Air to be a commercial activity, and ergo, you are not permitted to do Air.

Long term tenants and Air renting are definitely NOT the same thing.

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