AST Tenants have turned my House into an Airbnb hostel

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    AST Tenants have turned my House into an Airbnb hostel

    As a newish landlord (this is not my job), I have just found out I have a possibly major problem, and would be grateful for any salient advice.
    .
    FACTS:
    I own a mortgage-free 3-storey 4-bedroom house in London which I have let out to 3 tenants via an AST (12 months, no Break Clause; each is listed on the contract) for the past 2 years via a local Letting Agent.
    They have been unproblematic (until now); kept the property in good condition; always paid rent on time.
    They renewed their Tenancy a week ago and I intend this to be the last year of rental.
    I hope to get planning permission over the coming year to start major construction works on it in a year’s time. I need the rental income to help fund the future build.
    .
    I have just discovered to my horror (initially online, and then via a visit to the inside of the building) that the tenants have turned the entire building into a series of Airbnb lets - with 6 rooms (including the 2 living rooms) listed at the property.
    Upon further research I found that they are also doing this at almost 40 other listings across 6 other properties – some of which, including mine, they have listed on Booking.com & other sites.
    This is contrary to the terms of my AST contract with them, which forbids subletting (as well as use of the living rooms as bedrooms).
    .
    Deeply worryingly, their subletting also potentially invalidates my landlords insurance (which I just renewed and paid for in full up-front), which is invalid with change of tenant circumstances, & any loss or damage caused by non-tenants.
    .
    (1) INSURERS:
    I want to tell them immediately and discuss this with them, thought fear that they will regard this as void; refuse to alter the contract; refuse to repay any portion relating to the remaining term.
    --Is there any way in which Insurance Policies in such instances can be honoured, e.g. though amendment? I worry that they may agree to an amendment yet later claim that the Policy was automatically invalidated when the tenants started renting out.
    --Is there any insurer out there who would insure this situation?
    .
    (2) ENDING THE TENANCY:
    (a) My initial instinct is to talk to the tenants and get them to stop, but that might not work – and they clearly have a large number of upcoming bookings which they would probably want to try and honour – motivating their resistance.
    Despite having suffered broken trust, I’d be amenable to them staying if they desist, though I’d clearly need to more actively monitor the property, and would probably be best getting them out ASAP.
    My concern about the Airbnb discovery rests with the invalidation of insurance and any potential illegality, rather than increased wear & tear on a property that I hope to eventually gut.
    The Letting Agent says they cannot amend the contract in any way that will allow subletting.
    (b) From my understanding I cannot serve the Tenants a Section21 notice until 2 months before the end of their AST – almost 10 months away. There is no Break Clause.
    (c) From my understanding I could theoretically serve them a Section8 notice – on discretionary rather than mandatory grounds (#12) –– but because there are no rent arrears, this would not be likely to succeed, and be a waste of time and money, going to court & hiring a solicitor.
    I have heard and read this depressing (and seemingly illogical) advice from several people, including the National Landlords Association helpline earlier today.
    Everyone seems to be in agreement to avoid Section8 if at all possible
    So, scarily, it seems I am all out of options and cannot get the property insurable – unless we come to a Mutual Agreement of some sort, which I’ve read is usually triggered by Tenant request; best executed by deed; and difficult to achieve.
    The Letting Agent says my only option is a good solicitor.
    --Does anyone have any good advice on how to remedy this situation?
    .
    (3) LICENSING:
    I have been reading around the topic since this arose and discovered another horror fact: that the local council designated a selective licensing zone 18 months ago – and my house falls just within the zone, and should be licensed, even though my tenant arrangement would not ordinarily be subject to the HMO licensing covered by broader UK legislation.
    There seems no way round this other than to confess my idiocy in not knowing, and hope we can come to some agreement – which could entail large repayment of rent to them, and worse (though I do wonder how I would and could have known without reading the entire council’s website – and why the Letting Agent didn’t know).
    I’m scared (a) of possible punitive measures for something I had no idea about, and (b) that any remedies to the property that the council might require (e.g. it has basic carbon monoxide detector and battery smoke alarms, not interlinked electrical ones; no fire-escape signage or lighting) will be inordinately expensive for the brief period of further time that I hope will lapse before we start building works.
    --Does anyone have any good advice on how to remedy this situation, and pitfalls I should avoid?
    .
    Sorry for such a long post; I’m just trying to provide the detail helpful readers might ask for.
    Any helpful advice would be very gratefully received.
    .
    Thank you.
    Last edited by ALondonLandlord; 20-02-2018, 02:22 AM. Reason: (spelling correction)

    #2
    It seems to me that it is no longer an AST tenancy, so I would assume that statutory protections to AST tenants no longer apply.

    The selective licensing issue is all your fault. If they find out first, expect harsher penalties, although, if you are a year and a half overdue, you may still be classified as an unfit person to manage a rental property.

    Whilst having to admit to your offences may complicate this, particularly as licences typically require you to inspect every three months,I'd would normally think that shopping the tenants to the council was the safest approach. Given the complications, I think you need to talk to a criminal law solicitor.

    No legal adviser should advise you to lie.

    Comment


      #3
      Are they advertising rooms on a nightly basis, or is it really rooms for a long period of time.

      Subletting (R2R) is a hip new strategy for aspiring landlords.

      Comment


        #4
        My first thought is that if you can prove they are doing this at other properties then they are obviously running this as a business.

        Have you tried searching their names to see if they are listed at companies house?
        (A friend of mine died last year and searching his name just on google we were surprised to find him listed at CH as a comany director).

        Of course if they are dodgy then they may not be registered.

        A company cannot legally have an AST.

        If they had these other properties before yours then they presumably rented yours with the same intention, but didn't tell you they were a company and fraudulently rented as individuals.

        As their AST was obtained fraudulently it's probably void, so talk about S8, S21,etc. would be irrelevant.

        My thought is that you need to talk to a solicitor conversant with commercial rather than residental letting.

        That's the direction I think I would be persuing.

        If/when you have the proof then inform council, police, HMRC (bet they are not paying tax), advertising sites, maybe trading standards, etc.

        Like I say that's just me thinking, I'm prepared to be corrected.

        Comment


          #5
          As I understand it, for an AST to be valid, the property has to be the tenant's main residence, so even an individual would have lost the AST protections.

          Remember that the OP would need to admit to a criminal offence (with a fine of up to £20,000, a likely end to his property management career, and all the other consequences of a criminal record) in order to report the misuse of his property, which is why I think he also needs to talk to a criminal law solicitor.

          If the council finds out about the safety offences by other means, he can probably expect the maximum fine for the failure to license.

          Comment


            #6
            Also on
            http://forums.moneysavingexpert.com/....php?t=5797752

            6 month tenancies, not 12 months, next time, then periodic.

            What were their previous landlord references like?
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

            Comment


              #7
              And once you have a plan for getting your own property sorted, do the other landlords a favour, get their details off land registry (small cost, few £ per property), get in touch with them and have a chat about what is going on... They may also be unaware, let them know what you had to do to solve this and together you deal a proper blow to these dodgy 'tenants'. In a short space of time they can lose all the properties they are letting.

              Comment


                #8
                Looking at the OP's screen name, they are in London. Expect the council to take a hard line on the licensing breach.

                Comment


                  #9
                  Many thanks for all your thoughtful replies.

                  -From my fairly extensive research, it seems they manage about 6 properties; 1 of the tenants is actually listed on one site as living at one of the others. It seems like one of the other 2 may live at my house. They may have all started their AST living there, but yes – agreed, leaseholder64, I need to find out what legal protections they have since they don’t qualify for AST tenant protections.

                  -They are certainly running this is a business & I found a company at Companies House – and indeed they all run it together, though I can imagine (not the case here) 3 company directors can still get an AST together, if they live there.

                  -Good point nukecad that the any fraudulency in obtaining the AST voids the contract (even though it was done via a referencing agency), though it seems like it’s already been long void and yet they’d still have protection.

                  -Misuse of the property was only just discovered; this hardly immediately seems like a criminal offence on my part (though the failure to license within a Selective Licensing Zone, no matter how innocent, clearly (sadly) possibly is), but my 1st impulse is not to report it to the Council, but get the tenants to cease and desist, and ensure insurance cover is not voided.

                  -@wfd_property, they appear on both sites to be advertising on a nightly basis, though another company I found that links to them mentions ~“finding homes for young professionals” – as if they wanted to move away from shorter lets.

                  -@leaseholder64, why a criminal law solicitor and not e.g. a direct-access barrister that can appear in court if needed?

                  Many thanks.

                  Comment


                    #10
                    Never having had that level of involvement with the criminal justice system, I'm not sure about alternatives to a solicitor, but when people are reported as giving themselves up to the police the reports tend to say accompanied by their solicitor. (If you were advised to report your own offence, it would be to the council, not the police.)

                    I think the consequences of getting prosecuted are so drastic that you need more professional advice than you will get here.

                    Comment


                      #11
                      I'd suspect that it might be sensible to approach the landlords and tell them what you have discovered.
                      They may simply move away rather than run the risk of taking bookings and then not be able to honour them.
                      The legal fees and compensation claim they might face is likely to be very high if they try and fight.

                      As the occupants of the property aren't living there, I think the selective licensing may not be an issue (unless it applies to all rental properties).
                      HMO regulations apply to premises in which people reside, not holiday lets.
                      And even if there is an issue (these things are rarely black and white), your tenants are managing the property and it is (arguably) they who need to be licensed.

                      The AST status is possibly a red herring, you can serve notice to quit and s8 notice in parallel.
                      In both cases, the grounds are that the lease was obtained fraudulently and you can work your way through the tenancy agreement listing each breach.
                      Courts are usually quite resistant to landlord possession claims, as they result in the tenants being made homeless, but that doesn't apply here.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        Someone had this problem a few years ago, but there was no-one actually living in the sub-let house. I suggested the owner book all the rooms for a weekend and change the locks. Food for thought maybe?

                        I can't think why anyone would do a series of yearly lets. You could have let it go periodic, and give notice immediately.

                        Comment


                          #13
                          As there doesn't seem to be anyone living there, I can't see that there's much risk of illegal eviction.
                          The worst that can happen if the locks were changed is that the "tenants' could try and sue for breach of contract - which would be an interesting problem for them.

                          AirBnB would be my first point of call, and then the tenants.
                          Their business would be wiped out by a number of locked out guests.
                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment


                            #14
                            Contact AirBnB that you are the superior landlord, and that their customer doesn't have permission to sublet to get AirBnB to get the tenant suspended. If that happens, the tenant would probably be happy to surrender the lease.

                            You talk to a solicitor for advice etc. You [direct access] instruct a barrister to argue your case in court, they don't give you advice, they don't handle other legal matter outside of court for you.
                            I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                            I do not answer questions through private messages which should be posted publicly on the forum.

                            Comment


                              #15
                              HMRC taxman may be the best threat. Bet income isn't fully declared
                              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                              Comment

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