using a flat as a holiday let

[EricL]

Hi,

We have a studio flat in a small seaside building. It would be ideal as a holiday let for the summer season and let as an AST for the remainder of the year.

The lease for the flat has the following clause in schedule 1

"Not to use the Demised Premises nor permit the same to be used for any purpose whatsoever other than as a private dwellinghouse nor for any purpose from which a nuisance can arise to the owners lessees and occupiers of the other apartments comprised in the building or in the neigbourhood nor for any illegal or immoral purposes"

I have googled the term "private dwellinghouse" but I am still unclear as to whether this clause prohibits us from using the flat as a holiday let.

Does anyone know?

Thanks
Eric

[Raincliffe1]

I'm no legal brain, but it does sound as if it does. However, people with mortgages on their properties sub let rooms within their buildings near me and I'm sure that is forbidden as a condition of most mortgages. The question is 'is anyone really bothered? or will anyone check?' - some people that I know of - the answer is 'no' on both accounts. Personally, in my opinion only - you do things by the book or not, no grey areas. I have often wondered when people sub let like this through the back door how they stand on insurance if there was a fire, or a visitor had an accident on their premises or something was stolen. The best thing to do seek legal advice and then if you do go ahead find out from your insurer what you need in place to cover you and your visitors.

Katherine

[Jules]

Hi

The clause in the lease is common to most leases. This doesn't mean you can't sublet - although there may be another clause in the lease that may specifically cover that - it means the flat must be used as a domestic 'home' for people to reside in, not be used to run a business from, like a bookies or a shop. It's old fashioned legal speak and the bit about 'immoral purposes' is to prevent you running the flat as a brothel!!

It's all about protecting the neighboring properties from noise, intrusion and disruption.

If you operate it as a holiday let, then you ARE sub-letting and the lease will probably not be restrictive about this but your mortgage company will be if you have a standard domestic mortgage. You will need to ask the mortgage provider's permission to sub-let and they may not agree to it. This is where you should have a commercial mortgage, as they DO allow sub-letting, but the rates are invariably higher than domestic mortgages. If you keep quiet and don't tell your mortgage provider that you are operating the flat as a holiday let, they may never find out, but if they do, they are likely to terminate the mortgage (asking for full repayment) and may or may not offer a transfer to a commercial mortgage.

You should also have specific holiday letting insurance, not just domestic buildings and contents, as you will need cover for 'theft by hirer' (in case they steal the hifi/tv/whatever) and loss of earnings cover in case something happens (like a fire or flood) preventing you from receiving income, this would then ensure you had income to continue paying the mortgage. This kind of insurance also includes liability insurance to cover not only the guests but anyone working for you in the property, such as cleaners.

If you plan to let it for more than 20 weeks a year, you will also need to pay Business Rates instead of Council Tax. This also means paying separately for refuse collection. Both of these can often be cheaper than council tax, so don't be put off by this!

Jules

Coquet Cottages (http://www.coquetcottages.co.uk/)