NatWest has become the first big bank to allow customers to rent out their homes on Airbnb without getting into hot water with their mortgage.

For many people, renting out a spare room or even their whole home for a few weeks a year seems like a great way to make extra money. However, most of us don’t realise that doing so could mean we’re actually breaking the terms of our mortgage agreement.

Until now, most lenders have banned homeowners from listing their properties on short-term letting sites like Airbnb. But NatWest is changing the game, allowing both new and existing customers to welcome guests into their homes.

There are some rules, of course. Homeowners can only rent out their properties for a maximum of 90 nights per year and must use an approved platform like Airbnb.

What are the current rules on Airbnb and mortgages?

Ravesh Patel, a mortgage expert at Reside Mortgages, explains: “When you take out a residential mortgage, you agree to certain conditions. One of the main ones is that you’ll live in the property as your main residence and won’t rent it out.”

While NatWest is leading the way, most lenders still have a strict “no Airbnb” policy. However, some do allow it under certain circumstances:

• Nationwide: Permits letting for up to 18 weeks per year.
• Barclays & Metro Bank: Allow up to 90 days annually, with a maximum stay of 30 consecutive days.
• Santander: Requires “consent to let”, which comes with a £295 fee.

Mark Harris, head of mortgage broker SPF Private Clients, says that some smaller building societies might be open to short-term letting, but they are “few and far between.” He adds that you might find lenders are more flexible if you’re only renting out a room or two while still living in the property.

Don’t forget about buy-to-let mortgages!

Importantly, listing your property on Airbnb could even breach the terms of a buy-to-let mortgage. These mortgages usually require you to rent out the property on a long-term basis (e.g. a 12-month contract).

What happens if I break the rules?

You might think you can get away with renting out your property on the quiet. But be warned – the consequences could be severe.

“In the worst-case scenario, your lender could demand you repay your mortgage in full,” warns Mark Harris. The best way to avoid this is to get “consent to let” from your lender before you start renting out your property.

It’s not just your mortgage you need to worry about either. Renting out your home, or even just parts of it, on a short-term basis could invalidate your home insurance policy. Leaseholders also need to tread carefully, as short-term letting might be against the terms of their lease.

Why is NatWest changing its policy?

With the rising cost of living putting a strain on household budgets, many homeowners are looking for ways to supplement their income. The average Airbnb host in the UK earns almost £5,500 per year – enough to cover a large chunk of the average annual mortgage payment.

NatWest’s decision to embrace short-term letting reflects this growing trend. As Lloyd Cochrane, the bank’s head of mortgages, puts it: “We want to support our customers by giving them more options, including sharing their homes through sites like Airbnb.”