Homeowners in London who are considering renting out their homes during the 2012 Olympics have been warned by a city law firm that they could face fines of up to £20, 000. It will be necessary to consider tax, mortgage and insurance implications before deciding whether this will prove a profitable move.
Julien Allen, partner at Trowers & Hamlins, said that in Greater London it is necessary for home owners to acquire planning permission from the relevant authorities in order to use their properties for temporary sleeping accommodation.
Mr Allen said:
"Breaking prohibitions could lead to enforcement action and, if the situation is not remedied, could result in a visit to a magistrates’ court and a fine of up to £20,000.
… There could also be specific exclusions prohibiting short term lets if you rent your property but do not own it.
… If a short term let was granted where there is specific exclusion, the consequences range from losing your right to rent the house, to being sued for damages by the owner for potentially thousands of pounds.
… If the property is mortgaged, it is often a term of the mortgage that the owner only uses the property as their main dwelling.
… If this is the case, homeowners should ensure they get consent and a fee will commonly be charged. To default on mortgage terms could lead to enforcement action, which could mean repayment or repossession."
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