If you are thinking about investing in an apartment in London that you want to list on airbnb - it’s very important to establish whether you will be allowed to do it. There are two types of apartment ownership in London - leasehold or share of freehold. Leaseholder’s agreements will always have a term in years (e.g. 99 years) and a set of rules and conditions leaseholders have to abide by. Share of freehold, on the other hand, allows for a lot more flexibility, however such ownership is almost always more expensive.
Now when it comes to leasholder’s agreements, each one is different and often the wording can be vague when it comes to short term rentals. There are some leasehold agreements that will strictly forbid any tenancies that are shorter than for example 6 months, when others would only mention that short-term rentals are not allowed without specifying how short is actually short. In our experience it really depends on the general attitude of building management towards short-term rentals. Larger buildings with many apartments tend to be more lenient as there’s a lot of people coming in and out, whereas smaller buildings that have a more tightly knit community usually tend to be more strict when it comes to short-term rentals.
Share of freehold will always be a preferred type of ownership if you’re thinking about short-term rentals. Essentially, share of freehold means that depending on what share you have in the building you have the flexibility of agreeing with other freeholders on what’s allowed and what isn’t in your building. If you manage your airbnb guests well and they’re not causing any disturbances - usually other freeholders don’t object to this type of activity. In our experiences owners also offer various perks to get other freeholders to sign up for it - for example free cleaning of communal areas or gardening.
To summarise, leaseholder agreements vary and it’s important to read them carefully before deciding if it’s worth investing in a particular property. Share of freehold is always a preferred option for a type of ownership as it offers more flexibility to the owner. In both cases it’s advised to consult a legal adviser specialising in real estate before making a final decision.
