Using a standard buy to let mortgage for Airbnb or serviced accommodation puts you in breach. Here’s why lenders check, how they find out, and what to do instead.
Guests spent 100.9 million nights in UK short term lets during 2025. That’s up 11.5% on the year before, according to ONS figures published in June 2026.
Here’s the bit that keeps me busy. A good chunk of those beds sit inside properties funded by a buy to let mortgage that was written for something else entirely.
Not fraud. Not anything deliberate. Just a landlord who bought a flat, got a buy to let mortgage, tried a long tenancy, worked out the numbers looked better on Airbnb, and switched. Nobody sat them down and explained that the buy to let mortgage offer they signed said something quite specific about who was allowed to sleep there.
Almost every mainstream buy to let mortgage in this country is written on the same assumption. The property will be let to a tenant on an Assured Shorthold Tenancy – a standard residential tenancy agreement, usually six or twelve months, with the tenant having exclusive use of the place. One rent, one tenant and one set of rules for the lender if it goes wrong.
Most lenders go further. They set a minimum term, commonly six months. Whats key is that they exclude holiday lets. They exclude serviced accommodation. Some exclude company lets and lettings to anyone connected to you. It’s all sitting in the mortgage conditions, usually in a section headed “Letting the Property” that runs to about a page and a half. It is all about enforceability of security, tenancy deposits, lender capital and liquidity, and whether it is a residential buy to let mortgage or a commercial arrangment.
TBF, nobody reads it. I’ve been doing this thirty years and I’d say two borrowers in a hundred have read their mortgage conditions properly. Which is fair enough – they’re not written to be read and most borrowers have other priorities than curing insomnia.
But a guest booking three nights through a platform isn’t a tenant on an Assured Shorthold Tenancy. They’re an occupier on a licence. Legally, that’s a completely different animal. And that difference is the whole problem.
This isn’t moral disapproval. Lenders aren’t sniffy about Airbnb, most of them will use Airbnb. They just price and secure on the basis of what they were told. It’s not judgemental, it is the right item in the right box.
Think of it like insuring a family car. Same car, same driver, same road. But the minute you start using it as a minicab, the insurer wants to know, because the risk profile has changed even though nothing about the car has. Nobody’s saying minicabs are wrong. They’re saying that isn’t the policy you bought. It is a nice analogy, a minicab has more mileage, more risk, more potential for damage etc etc…
There are three real reasons a lender wants to know.
1 – Getting the property back. If things go wrong, the lender’s route to possession depends on what’s in there. A tenant on an AST is a known quantity with a known process. A rolling cast of short stay guests, possibly with a management company in the middle, is not. Some lenders have found themselves having to unpick bookings that were taken months in advance, following that with an agrument over liability for deposits and bookings turning up to find no property available. Its both a financial risk and a PR one.
2 – Valuation. The surveyor valued the property on a particular basis, on that basis the lender relies on the valuation and the valuers PI if the value falls short. A residential investment valuation assumes a tenanted flat. A short term let operation, especially a fitted-out serviced apartment, can value very differently – and in a forced sale, the buyer pool is both very different and more limited too. We’ve written before about why the valuation basis matters more than the headline percentage.
3 – Insurance and condition. A standard landlord buildings policy generally won’t cover paying guests. If the lender’s security is uninsured, they’ve got a problem – and ergo so have you, which I’ll come back to, because this is where people actually get hurt.
For years, this was a rule that existed on paper and was rarely enforced. That has changed, and it’s changed for reasons that have nothing to do with buy to let mortgage lending.
Since January 2025, online platforms including Airbnb and Booking.com have been required to report host details to HMRC each year – including, specifically, the address of each property listed. That data exists now and is available to view. It didn’t before. The argument that your buy to let mortgage lender won’t find out just doesn’t wash anymore.
In Scotland, every short term let has needed a licence since 2023, and licensing registers are public. In England, a national registration scheme and a new C5 planning use class for short term lets are working their way through, with April 2026 talked about as a start date, though that has slipped since I’m writing this in September 2026. In Greater London, letting a home as temporary sleeping accommodation for more than 90 nights in a calendar year has needed planning permission since the Deregulation Act 2015, and boroughs have got a lot better at spotting it, a lot better.
Then there’s the mundane stuff. Lenders ask to see the buildings insurance schedule. They notice when a policy says “holiday let”. Underwriters look at listings – a flat with a distinctive kitchen and a postcode is not hard to spot. And at remortgage, product transfer or further advance, someone actually reads the file and it all comes home to roost.
Which? has reported that lenders including Nationwide, RBS and Santander treat unauthorised short term letting as a breach. That reporting is a few years old now, and if anything the position has hardened since. It is a breach, the pricing is wrong, the lender risk is wrong, so why would they let it go?
Rarely a repossession letter on day one. That’s not usually how it plays out.
What happens is smaller and more expensive. Consent is refused. The rate is loaded. The product transfer you were counting on gets declined, and you’re on the standard variable rate while you scramble. Bye bye profit, bye bye rental income. Or the facility is called in – usually with a notice period, but a notice period is no comfort when you need a specialist lender and a valuation inside a month. Plus those bookings you have taken? You may need to refund and cancel them.
The one that genuinely worries me is the insurance. A landlord policy voided because the property was let to paying guests doesn’t just cost you a premium. It costs you the claim. An escape of water in a top floor flat, with a guest in residence and a downstairs neighbour’s ceiling on the floor, is a five-figure problem that becomes your five-figure problem.
And if you’re a leaseholder, read your lease. A large number of residential leases prohibit letting for less than six months, or require the freeholder’s consent. Breaching your lease and breaching your mortgage at the same time is a bad afternoon in anybody’s book.
None of this is an argument against short term lets. It’s a good sector and it’s growing – the ONS numbers say so. It’s an argument against funding a short term let business with a buy to let mortgage designed for a twelve month tenancy.
The right funding exists. It’s just narrower. On our panel there are fewer than fifteen lenders with genuine short term let and serviced accommodation criteria. Deposits typically start at 25% and often sit at 30–35% for full serviced accommodation. Rates usually run 0.5% to 1.5% above equivalent buy to let mortgage, though that gap has been narrowing and will likely continue to narrow further.
The thing that decides most of these cases isn’t the property. It’s how the income is presented. Lenders want twelve months of actual booking data, averaged across the year, not a screenshot of a good August. Sadly a good August isn’t going to pay the buy to let mortgage come March. Some will stress on the AST-equivalent rent instead, which sounds harsh but is often the easier route for the lender – it give them a fallback should they take the property over. Get that wrong and a perfectly good deal gets declined for the wrong reason. We’ve set out the detail in our piece on short term let mortgages and where the funding actually sits, and on why short term lets are now a serious asset class.
This is also why it matters who you tell. We sit separately from the lenders, the accountant and the taxman. When a client tells me the flat has actually been on Airbnb for eighteen months and they never mentioned it, that’s not a problem – that’s just information I need in order to place it properly. It’s the same as when a client says they’re buying a property portfolio, do they mean the properties or the SPV that owns it? I’d far rather hear it in the first conversation than have an underwriter find it in month two. We are a safe space, tell us everything and we can works out the best route forward. Preparation decides the outcome on these cases, exactly as it does with complex buy to let mortgages generally.
If you’ve got a property let short term on a standard buy to let mortgage, four things.
Then have a conversation before you need one. Fixing this at the point of a product expiry is straightforward. Fixing it after a lender has written to you is a good deal harder, and can quickly become considerably more expensive.
I’ve watched enough people get caught out by a clause within their buy to let mortgage they never knew was there. It’s rarely the return that ruins these deals – it’s the paperwork underneath them.
If any of this sounds like your situation, I’m always happy to have that conversation.
David Farmer
Lime Finance Solutions
Usually not. Lenders rarely make a distinction. Most buy to let mortgage conditions require a tenancy of at least six months, which rules out short stays regardless of how often, or infrequently, you do it. A handful of lenders permit limited short term letting with written consent, but that written consent can be difficult to obtain from an admin perspective. The only way to know is to read your conditions or ask – rule of thumb, no.
I hear this one a lot. The answer is far more easily than they used to. Platforms have reported host details and property addresses to HMRC since January 2025, Scottish licensing registers are public, and an English registration scheme is on the way. Insurance schedules and public listings do the rest. It isn’t the certainty it once was that nobody would notice. In addition, AI is making the whole checking far easier and quicker. TLDR? Yes.
It varies. Common outcomes are a demand that you revert to a standard tenancy, a refusal of consent, an increased rate, or a refusal to offer a new product at the end of your fix. If the lender has greater concern then the loan can be called in. Immediate repossession is rare, but being stuck on a standard variable rate with no exit is not and is pretty painful to the pocket. Bear in mind that in these scenarios the lender holds all the cards, so pretty much what they decide goes.
Not quite but there is a close association. Holiday let products generally assume seasonal leisure letting. Serviced accommodation products cope with year round, city centre, business-traveller letting and often with a management company in place. Some lenders do one and not the other, so it matters which box your property genuinely sits in. There is a close connection between both but be clear about where your property sits.
Not always, but it’s become the default for most new short term let purchases, largely for tax reasons following the end of the Furnished Holiday Lettings regime in April 2025. It’s worth taking advice from your accountant on this before you apply, not after. Your other considerations are around affordability with the rules for SPV limited company lending generally being more generous and favourable to the borrower.
Sometimes, if you ask really nicely. Some lenders will vary the terms of an existing facility rather than requiring a full remortgage but there are no guarantees and sometimes there is a cost to the lender in breaking that agreement, one they will want to pass onto you. Otherwise the sensible move is to plan the switch for the end of your current fixed rate. Either way, start the conversation six months out because the more time you give yourself the better your options will be.
Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.
Tel: 01293 541333
Email: hello@lime-fs.com
Tel: 0207 866 2102
Email: hello@lime-fs.com
Tel: 01293 541333
Email: hello@lime-fs.com
Tel: 0207 866 2102
Email: hello@lime-fs.com
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