The Adrian Loveridge Column – Airbnb Participants Possibly Violating Mortgage Agreement

Adrian Loveridge

According to a recent UK Telegraph newspaper article, almost 80,000 British home owners are earning income by renting part or all of their homes through Airbnb – ‘and this number is doubling by the year’.

The popularity of the short term rentals website was boosted further in last April’s budget when the Chancellor of the Exchequer gave a GB Pounds 1,000 tax break for people who make money out of their property. This will result in many Airbnb landlords escaping tax altogether, but apparently copious numbers of these seem unaware that this sideline rental business could lead to trouble with their mortgage lender, insurer, freeholder or local authority.

Under the heading Risks to your mortgage, the publication points out ‘Home owners letting a property directly, run the risk of invalidating the terms of their mortgage, meaning that in a worst-case scenario a lender could ask for full repayment’. The head of residential property at leading law firm, Slater and Gordon, clearly articulated that ‘Often a mortgage arrangement won’t allow you to sublet the property – so depending on the terms of the mortgage you run the risk that your mortgage company would take action’.

Bearing in mind the extra-ordinary growth of short term rental in this ‘sharing economy’ Airbnb type accommodation offering on Barbados, I believe that our banks, financial institutions, insurers and all lenders offering mortgages have a moral obligation to jointly spell out the rules.

I have recently seen whole houses being offered on websites like Airbnb, so where is the fine line of acceptance by the lender?

Certainly in Britain, there appears to be no doubt. Shawn Church of money broker firm, Private Finance stated ‘If you’re letting the entire house property, that is likely to be in breach of standard mortgage terms, and you should get the consent of the mortgage lender’. It also brings the validity of the insurance into question and whether or not that property is properly covered, if it is being used for a purpose outside normal lending criteria and being occupied by persons other than the borrower.

In fairness to Airbnb, they do offer ‘host protection insurance’, but it is currently only available in 15 countries which does not include Barbados. Did the recently signed MOU (memorandum of understanding) between the Caribbean Tourism Organisation and Airbnb take this into account?

So exactly how does the person(s) staying in a Airbnb property know if they are adequately covered by insurance including critical areas like public liability?

What research and ongoing monitoring has, or is being done by our locally based insurance companies?

Britain also has laws and regulations which are intended not to disadvantage those people genuinely trying to purchase their first home, including a requirement that anyone who lets their house out for more than 90 nights a year, requires special planning permission, which is partly intended to deter property speculation.

The Telegraph quotes that 33,715 properties are available through Airbnb in London, with more than half being entire houses or flats and 65 per cent of which are available for more than 90 nights a year, which seems to make an absolute nonsense out of self regulation.

57 thoughts on “The Adrian Loveridge Column – Airbnb Participants Possibly Violating Mortgage Agreement

  1. Barbados doesn’t need anything free from anybody, most of them cannot be trusted, going as far as poisoning our children because we’re dark skinned…the depth of their vehement evil hatred. They’re really vein and conceited about who they are, have warped perspectives, assuming others have the same vanity and conceit, and harming them.

    Many notice our back decorations, hair peaks etc. and know they’re different from their own; completely missing the point, which is authentic cultural expression.

  2. Interesting article…..I for one see the future of our tourism product in the hands of the average Bimmer through Airbnb or similar operations and would suggest that govt be lobbied to enact legislation to simplify its operation here.

    • @Vincent

      Before your ‘vision’ is realised we must understand which market segment fits our tourism plant/strategy.

      Then there is the question raised by Adrian, does letting properties with mortgage agreements violate agreements with banks?

  3. David

    Over the last 50 odd years the ordinary Bimmer has travelled and hosted a number of times,all I am suggesting that this informal operation needs to expand with govts approval and all the Is and Ts dotted.

    Other than an oversite role,govt should stay far from it.

  4. Adrian: You are allowing your hotelier roots show. Airbnb, for the most part either allows someone who would otherwise not purchase property do so, or allows those that do, to earn some extra income. There is a much stronger possibility that what ever is generated stays in Barbados and is not syphoned off shore . Is your questioning of liability and mortgage infractions more to off put potential Airbnb entrants rather than concern for their welfare?

  5. Yes David it does. Were I in Adrian’s shoes as a hotelier paying various taxes and being constrained by rules and regs I would be terribly p’ed off by the explosion of Airbnb, Homeaway etc.

    I enjoy his columns but I am not for one moment lulled into thinking his many written pieces on this subject is based on his altruistic nature.

    So yes. This mortgage matter is a legal contract concern between the mortgagor and ‘ee’ and
    it should have absolutely no interest to Adrian. me you or anyone outside that agreement.

    It is a wonderful wedge to drive legal ‘jeopardy’ and problems for these entrepreneurs.

    It is not for example a housing mortgage bubble type problem that affected all and sundry when it exploded.

    But more power to Loveridge. He does keep a serious subject in view.

    And we cater to all segments…as we should.

    An all-inclusive type traveler is hardly likely to do an Airbnb; yet a Sandy Laner of course does an Altman luxury villa (which is Airbnb on steroids, in one perspective).

    Some guests at Loveridge’s property would almost certainly do an Airbnb.

    Of course there is room for Air and regular hotels so I agree with Vincent that government oversight and control is needed… BUT not the many regs and taxes that I am sure folks like Adrian would love in order to level his competitive playing field.

  6. Google Barbados villa rentals.

    So I believe “mortgage rules” do not come into play because owners of “villas” are not

    likely to have mortgages. Advantage RWP.

    AirBnb should be allowed in Barbados so middle class Bajans can suplement their

    mortgage payments or simply increase their income.

    Hotels already have the advantage of that massive subsidy called the BTMI.

  7. @Hants

    Whether Adrian has a vested interested does not change the fact that if the mortgage issue is a potential hurdle it should be addressed frontally. Also note it has not prevented local properties from getting onboard. Note also many of those properties extended to support CWC2007 probably acquired funds from lending institutions.

  8. @ David ” if the mortgage issue is a potential hurdle it should be addressed frontally.”

    Totally agree with you. I support sensible regulations.

    Barbados can benefit from more diversification of the Tourism product.

  9. In the 48 years that I have been promoting Barbados, you only have to ask ANYONE that I have worked with that I promote the destination first during the literally hundreds of trade shows, consumer shows and travel agents I have personally visited over the years. All at our personal expense with not a penny from the BTA/BTMI. It is the taxes from the private hotel/villa sector who grows new and existing airlift and give umpteen free rooms to travel agents, tour operators and media. I am not against Airbnb (and others) in any respect providing that they meet the same standards the rest of us have to apply and that they pay taxes which support our efforts to build the destination. At the moment Airbnb has a completely free ride.

  10. Robert, absolutely. Just done a media interview asking WHY the private sector was holding FX offshore. Perhaps the journalist should have asked Butch Stewart the same question? Payments are processed offshore, in the case of our stay, in Ft. Lauderdale with no VAT payable.

  11. You pissing all over airbnb. Why dont u call on those hoteliers that have stiffed taxpayers for money over the years and has yet to pay back the million dollars in loans given

  12. Chuckle…..since when govt want taxes from hoteliers……Ah thought all were tax exempt by now for 40 years.

    I wonder if they have paid Adrian’s old tax refunds yet?

  13. Vincent Haynes April 24, 2017 at 11:55 AM #

    “Chuckle…..since when govt want taxes from hoteliers……Ah thought all were tax exempt by now for 40 years. I wonder if they have paid Adrian’s old tax refunds yet?”

    @ Vincent

    Hahahahahaha….. an excellent question that deserves an answer.

  14. Angela, please name those hotels other than the Government disaster that is called GEMS.
    Still no due VAT refunds payable since February 2012 and up to almost $40,000 owing interest free so far.

    • @adrian

      Why are you engaging a yardfowl? Nothing you say will convince ac or ccc that your intention is honorable.

  15. This is analogous to the Uber battle as it relates to insurance and lease/rental agreements.

    It’s all about money.

  16. Am all for airbnb being weaved into the communities to spread the tourist wealth in the communities…on the island, not off the island.

  17. Adrian you want to know how much the BTI and Hoteliers owes govt go read the Auditir genral 2011 report. The monies owe are in the millions not including interest accured which can go a long way in repaying your vat expenses.Think about that

  18. Artax

    They were on the ball….they read the 2011 report(good) and seeing the amount of taxes owed decided that it was a good thing to stop everybody from paying any new taxes for 40 years…..a very pro-active govt…..what say you….or did I get something wrong here?

  19. 2011? That is 6 years old?
    Granted, outstanding monies are owed. The question becomes; WHAT are the authorities doing to collect those funds, beyond offering amnesties on the penalties accrued.
    This chorus of “dem en paying we, so we en paying dem” is childish. The authorities have the vested power to collect? Start seizing some assets and the message will get out very quickly.

  20. Tell that to Adrian who runs around in every nook and cranny to advise govt on the wrongs govt is comitying but never ssys a peeking word about his cohorts in the tourist industry who has fleeced the taxpayers over the years out of millions in loans .nowAdrian dares me to tell him how much or if any hotels owes govt monies what a dare. Monies that can go a long way in tackling govt debt.
    The problem that govt faced with these slackers is that many jobs might be lost if govt acts agressively even though the courts have already given sanction to govt to act accordingly in pursuit of monies owed.

  21. @ Northern I agree that just as ride share has totally revamped taxi travel and car ownership it has evoked similar commercial business issues. And just as in those cases lawyers and insurance companies are working to offer the coverage to fix the issue – at a profitable cost – so too will this be resolved in a timely manner.

    Issues such as this will not affect the quantum shifts in industries taking place currently.

    It is really a non-issue for all practical purposes.

    The choice is clear. Get excited about hazards that cause stumbles or refocus on harnessing energy and strategy in order to combat or coexist.

    Amazon’s presence is decimating the retail industry. Stores across the US are closing at an astonishing clip. Fuss on their stumbles or prepare to create your niche.

    Change always disrupts the best laid plans of ‘men and mice’!

    However, Airbnb’s “completely free ride” as Loveridge labelled it is gradually coming to an end in many destinations…how soon that happens in Bdos is really up to guys like him and their corporate groups.

  22. An article about rich mostly white people renting their properties through airbnb causes a ruckus , how many bajans would give a rats a,ss about white folks who can afford the good life sufficient enough to own a house and can rent it as a secondary income and do not have the good sense not to understand the legalities and pitfalls in doing so .What most bajans would most be interested in are those articles that would shame hoteliers into paying back govt loans especially at a time when govt is strapped for cash and needs money to pay the bills and furthermore that debt is now pushed into the hands of bajans who can least afford to buy a house ,
    Go read the Auditor general report and tell BU if that is not scandalous enough to write about

    Hotels & Resorts Ltd

    The current loans to Hotels & Resorts Ltd were reflected in the ledger and in the financial statements as $107,723,938. However, an interest-free loan of $14,496,325.61 received from the Public Enterprise Investment Fund (PEIF) was not reflected in the accounts at year end. This understated the amount owing to the Government from Hotels and Resorts Limited by $14,496,325.61 in the financial statements.

    Barbados Tourism Investment Inc. (BTII)

    The loan outstanding for BTII was reported by the Treasury as $235million and accrued interest as $23,437,155 at the April 1, 2010. It should however be noted that accounts receivable for this loan was reported in the Government’s 2011 Financial Statements at $141,500,000 with accrued interest at $19,351,206. The receivable and the accrued interest
    were therefore reduced by $97,885,949.83 from the previous financial year. No repayments were received from the BTII during the 2010/2011 financial year.

    this is money that was loaned to the hotel industry and govt has to fight tooth and nail to collect debt which is being saddled on the taxpayers back , f..king shameful and scandalous to ,say the least
    Adrian if you want to collect your Vat expenses talk to your lilly white cohorts about paying back .If not you can cry till the moon turns to blood you would not get a penny, Govt has bigger fish to fry by paying off debt that can cause the country into free fall and not taking the risk of paying those who have feasted off the fatted calf for many years .

  23. Interesting BTII figures….I wonder how far back they go….how many of those hotels are still operating and why not name them as Adrian has asked.

    I remember one chap absconding owing millions to govt and another disappearing in a light aircraft supposedly to the bottom of the ocean also owing millions…..are these included in the figures as well as both operation closed down.

    • @Vincent

      Many of those hotels are closed, bankrupt. Many of the loans were the usual political disbursements to ‘friends’.

  24. The fact that those loans are still on the books is evident that there are hotels or hoteliers that still owe these loans to govt, david stop spreading lies by stating that the total sum is owed by people who are no longer have business,, fact being that unless a court judgement was called for these loans not to be paid because of financial duress or any hardships which can affect loss revenue or hardship to the business at a loss these loans remain on the books as outstanding and due payable to govt by owners

  25. David

    What a pathetic climb down by govt with their fake news….how on earth could they get funds from dead,bankrupt non existent entities….I have no doubt that the VAT debt is the same…..sad….they better bring back HH as he knew how to spin.

  26. David, can you please point out to Angela that Hotel and Resorts Ltd (or GENS) was Government’s foray into hotel ownership and ‘management’ and had nothing to do with the private sector. One of their last hotels (Time Out) was recently sold for BDS$7.5 million against a declared book valuation of $17 million. Roughly $90,000 per room which would not even build a 2 star room hotel now. This is the misinformation (fake news) that these people are putting out as they are simply ignorant of the facts.

    • Adrian serious commenters do not take ac or cc seriously.

      Bad advice

      Added by Marie-Claire Williams on April 24, 2017.

      Don’t raise airline departure taxes!

      That is the stern warning to Government from hotelier Adrian Loveridge in response to a proposal to increase tourism taxes, put forward by the Foreign Exchange Working Group of the Social Partnership, which was mandated by Prime Minister Freundel Stuart to advise Government on measures to boost the dwindling foreign exchange reserves.

      On the other hand, Loveridge said he had no difficulty with the recommendation by the same committee to increase the cruise head tax.

      Concerned that the bread and butter tourism industry is not producing the required financial returns while the island’s stock of foreign reserves is fast declining, the Committee warned of the need for urgent corrective action to stem the downward trend, including hikes in cruise visitor head taxes and airport departure fees.

      Adrian Loveridge

      However, Loveridge, the owner of Peach and Quiet, told Barbados TODAY the exit tax of US$30 is high enough as it is, and any increase will hurt, not help, the country.

      “Our departure tax is already one of the highest in the region, we already levy VAT [Value Added Tax] on air travel, so we are already an expensive destination to get to and leave from, so that certainly would not be on my list for sure,” he said.

      However, he adopted a different position on the cruise tax, which stands at US$6, arguing that “cruise ship companies contribute very little in terms of land-based tourism to the economy”.

      Loveridge’s stance was supported in part by one of the largest travel agencies here, Going Places Travel, which went one further by opposing any increase in tourism taxes.

      “There is no room for tax increases on cruises or airport departures in Barbados. Travel is already taxed very heavily and we do not need to give tourists a reason to find another destination,” County Manager Alanna Gray told Barbados TODAY.

      Meanwhile, Loveridge suggested that if Government wanted to increase the financial returns from tourism, it should consider lowering VAT on direct tourism services. He pointed to the case of Argentina, which recently adopted a similar move, and according to him, within a few months, that country recorded an increase in arrivals figures and overall spend.

      “It would encourage more people to come to Barbados through lower taxes which would be offset with a higher net spend and hopefully, a higher average spend of each visitor that comes to our shores,” he said.

      In response to the working group’s concerns that the tourism industry is not producing adequate financial returns, Loveridge said Government has only itself to blame.

      “We’ve done this to ourselves, you see. We’ve allowed particular players in the field to come in, getting enormous tax concessions – 25 years without any tax . . . . We’ve allowed this to happen,” he said in a clear reference to the 25-year tax holiday given to Sandals International.

      The concession includes a waiver on all import duties, taxes, impost and levies on capital goods such as building materials, as well as food, alcohol and beverages, and extends to duties on the importation of motor vehicles and personal and household effects for senior hotel staff and non-Barbadian workers.

      When the 25-year tax holiday is ended, the rate on concessions to Sandals will be cut by 50 per cent for an additional 15 years.

      “When my wife and I stayed at the Sandals property we asked for a VAT receipt and we were told that Sandals don’t pay any VAT because it’s a tax. And the money that we paid by credit card is collected offshore in Fort Lauderdale and doesn’t necessarily even come back to Barbados. So when you have a government saying the private sector tourism industry is keeping money offshore, they are the people that have made it possible,” Loveridge charged, adding that small hoteliers like himself collect the VAT locally.

      He added that he would like to see the local tourism industry operated on a more level playing field, where all partners benefit from some level of concession, which he recommended was best done by reducing the VAT rate on all aspects of the sector.

      “So car rentals, restaurants, tourism attractions and activities, people like Atlantis Submarine, and all the remaining accommodation providers pay the same rate of VAT, 7.5 per cent.

      “I’d also like to see the enormous influx of unregistered accommodation also brought into the tax threshold. As the protocol director of Airbnb said recently, roughly 16,000 people booked accommodation through Airbnb on Barbados last year. I’d like to see all those accommodations providers paying VAT as well,” Loveridge said.

  27. Here we go again Adrian putting in his two sense worth of negativity. Yet refuse to condemn Hoteliers who have refused to pay back govt loans at tax payers expense. The committee came up with a reasonable and not unprecedented departure fee recommendation

  28. David, these tax increases are getting truly beyond commonsense…piling more taxes on departures is not the way to go.

    It is surely an easy short term measure but will have long term negatives affects.

    Of course as in all these things it is what will be the gain before the point of diminishing returns. Will the gov’t share the projections or is that info already available.

    Undoubtedly a (further) tax on home sharing is in the pipeline…clearly the principal reason it is not yet in force derives from unresolved discussions with the US companies.

    The ‘amusing’ thing with this matter is of course that governments over the years have done a hodge-podge job of effectively managing all sectors properly…after all they were always people renting to UWI students or running a lil ‘guest-houses’ in Cattle Wash or The Gap… taxes were really never charged on those properties if a person did not report the revenue for income tax purposes.

    But the home-sharing explosion has massively expanded that so effectively gong after a tax now makes better sense and is understandable (I grudgingly accept).

    The real brouhaha will be the gov’t seeking PAST years data from the Airbnb’s of this world and attempting to levy local taxes for that revenue.

    They couldn’t be that ridiculous..could they!

  29. Canada.

    ” To qualify for an RBC Investment Property Mortgage, you must have a good credit history,

    demonstrate sufficient rental income (either through existing tenancy documentation or an

    opinion of market rent), and have enough non-rental income to meet the obligations of the



    What are the “mortgage rules” on property in Barbados ?

  30. I recall that VAT was introduced as a tax to end all taxes and under OSA we saw a scaleback of taxes as VAT raked in a whopping amount of revenue unheard of before.

    This poor rakey govt came in and decided to revive taxes,create new ones and increase those still on the books as well as VAT……..end result net decrease in taxes,crumbling infrastructure and a dirty landscape.

    Let them keep talking about who owes and increasing taxes……ole bajan saying…deh gine soon sey.

  31. also hants when you are getting the mortgage rents are not used at full value to valid mortgage in calculation

  32. Furthemore since the cost of flying as decreased in the past bodes well to say that some increase of the departure tax would not impact tourist arrivals significantly

  33. @ AC

    Your need to pontificate on any and every given matter is astounding. [angela Skeete April 12, 2017 at 8:42 AM #]

    Where is the proof to substantiate your claim that “the cost of flying as decreased in the past years,” especially against the background of Caribbean nationals complaining about the increased cost of inter-regional travel as a result of the high taxes levied by regional governments?

    Tourists from outside the Caribbean region have also complained about Barbados being a “high priced destination.” Obviously, an increase in departure tax will cause visitors to consider cheaper destinations.

    You are so caught up in trying to defend this inept DLP administration to the extent that common sense always seem to elude you.

  34. One of the better displays of yardfowlism….evah on BU.

    Tries to make a point by quoting an Auditor General report, and then proceeds to post on public bodies H&R and BTII. Clueless beyond imagination.

  35. The cost of flights to barbados are higher in the last few years than I ever paid. I come down around the same time every year so I notice the difference.

  36. @Lawson, but is that not a route matter from Canada!

    In the same recent years there have been excellent price offers on some US routes. In some instances round trip travel from Bdos to places like New Jersey have been less that $250!

    So yes these are special and may not match the summer travel windows you use but still…

  37. Dribbler, it is timing just like accommodations rise or vehicles cost more during cropover now its the airlines.

  38. @angela Skeete April 24, 2017 at 5:55 PM “The current loans to Hotels & Resorts Ltd were reflected in the ledger and in the financial statements as $107,723,938. However, an interest-free loan of $14,496,325.61 received from the Public Enterprise Investment Fund (PEIF) was not reflected in the accounts at year end. This understated the amount owing to the Government from Hotels and Resorts Limited by $14,496,325.61 in the financial statements.”

    Wasn’t Rodney Wilkinson running tings at Hotels & Resorts Ltd.?

    It would be wise to kiss that money bye, bye!!

  39. So when my relatives visit, and their friends, and their friends friends, and their relatives friends and I put them up all for free, and they are very happy, even if I am not. That is ok, no regulation required.

    But if I dare to insist that they leave a little something, if only to defray the horrendous bill for feeding them, and the fans and air conditioners for the heat complainers, then I am be subjected to all kinds of heavy handed regulation?



    I think that this is another that we need to monetize because it seems that if we charge nothing then the people from the north they see us as worth nothing.

    No more putting up my grandmother’s third cousin’s grandchildren for free.

    If they want a winter escape, and hot meals and clean sheets. and transportation then let them pay.

  40. There is no such thing as kissing loans goodbye .govt has to find a way to recoup those losses and in the most likelyhood it is pass on to taxpayers from whom it was borrowed from in the first place

  41. Wait…….I reading right………There is no such thing as kissing loans goodbye .govt has to find a way to recoup those losses ……,no,no,ah seeing right……………….cant be.

    19 milllion ….. turf club……I thought that got written off… mistake it was a debt not a loan……so debts can be kissed good bye but not loans…..good to know.

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