The rise of short-term holiday accommodation platforms such as Airbnb has transformed the UK property market, with many couples now owning one or more holiday lets either as a side venture or as their primary source of income.
When a relationship breaks down, these properties can present complexities that go beyond the usual family home dispute. Under the framework of Matrimonial Causes Act 1973, the court has wide discretion to redistribute assets on divorce. However, when those assets are income-generating holiday lets, additional questions arise: is the property an investment, a business, or both? How is it valued? And what happens to the online presence that may have taken years to build?
This article looks at how jointly owned holiday lettings are treated in divorce.
Is a holiday let treated differently from other matrimonial property?
The family court’s starting point is that all matrimonial assets are subject to division, regardless of whose name they are in. If a holiday let was acquired during the marriage using joint funds or matrimonial income, it will almost certainly be considered a matrimonial asset.
However, holiday lets differ from standard buy-to-let properties because they often operate as active businesses. Unlike a long-term rental, a holiday let may involve:
- Marketing and advertising
- Guest communications
- Cleaning and maintenance schedules
- Dynamic pricing strategies
- Management of online reviews
As such, the court may view the asset not merely as a piece of real estate, but as a trading enterprise.
Who decides what happens to the property?
Where possible, couples are encouraged to reach agreement through negotiation, mediation, or collaborative law. If they cannot agree, the court will decide for them. The judge will consider the statutory factors under section 25 of the Matrimonial Causes Act 1973, including:
- The income and earning capacity of each spouse
- Financial needs and obligations
- Standard of living during the marriage
- Contributions (financial and non-financial)
- The welfare of any minor children
With holiday lets, the court will look closely at whether one spouse relies heavily on the income generated by the property.
What if both spouses rely on the holiday let income?
Some couples build portfolios of short-term rental properties that become their primary livelihood. If both spouses depend on that income, the court faces a balancing exercise.
There are several possible outcomes:
- Sale of the property or portfolio: The proceeds are divided, allowing each party to establish separate financial independence.
- Transfer to one spouse: One party retains the property (often the one who manages it day-to-day), while the other receives a compensating asset or lump sum.
- Continued joint ownership: Though rare, some couples agree to continue running the holiday let jointly post-divorce. This requires a high degree of trust and is generally discouraged unless the relationship is amicable and the holiday let structured formally.
If the holiday letting business generates substantial profits, the court may treat it in the same way as a small family business.
Does it matter if the holiday let is owned through a limited company?
Many holiday lets are structured via a limited company for tax efficiency. If the property is owned by a company in which both spouses are shareholders or directors, division becomes more intricate.
The court cannot directly transfer company property in the same way it can transfer a personally owned house. Instead, it deals with the shares in the company. If both spouses own 50% of the shares, those shares form part of the matrimonial assets.
Key considerations include:
- The company’s valuation (including goodwill)
- Dividend history
- Director loans
- Retained profits
If only one spouse holds shares, but the company was built during the marriage, the court may still treat it as matrimonial property. Importantly, the corporate veil does not automatically shield assets from consideration in family proceedings. The family court looks at the reality of ownership and control.
Does it matter when the property was acquired?
If the holiday let was purchased before the marriage, it may be argued that it is a non-matrimonial asset. However, the longer the marriage and the more the property has been integrated into family finances, the weaker that argument becomes.
Over time, pre-marital property can become matrimonialised, for example:
- If rental income was used to fund the family lifestyle
- If both spouses contributed to renovations or management
- If mortgage payments were made from joint income
In long marriages, especially, the court is less inclined to ring-fence such assets unless there are compelling reasons to do so.
How are holiday lets valued?
Valuation is one of the most contentious aspects which typically fall into two components:
- The property value: A standard market valuation is obtained, usually from a chartered surveyor. This reflects what the property would sell for on the open market.
- The business value: If the property operates as an established holiday letting business, an accountant may assess:
- Average annual profits
- Future income projections
- Brand reputation
- Customer database
- Online review history
In some cases, especially where the property is heavily reliant on its booking history and reputation, there may be an element of goodwill attached.
However, courts are cautious about overvaluing small lifestyle businesses. If the income is closely tied to the personal involvement of one spouse, goodwill may be considered personal rather than transferable.
Who owns the Airbnb listing and online presence?
An established Airbnb listing with hundreds of five-star reviews can be extremely valuable. It may rank highly in search results and command premium pricing.
Questions that arise include:
- In whose name is the Airbnb account registered?
- Who has administrative access?
- Is the email address personal or business-based?
- Were reviews earned through joint effort?
Technically, the account holder controls the listing under the platform’s terms. However, in divorce proceedings, the court can treat the listing as part of the business asset.
Where the listing is intrinsically linked to one individual’s profile, for example, guests booking specifically because of a “Superhost” status attached to that individual, this may affect valuation.
It is worth noting that platforms such as Airbnb operate under their own contractual rules, and practical enforcement of any court order may require cooperation.
Can one spouse force a sale?
If agreement cannot be reached, the court has the power to order sale. Even if one spouse wishes to retain the property for sentimental or business reasons, the overriding objective is fairness.
In some cases, particularly where children are involved, sale may be deferred if the holiday let also doubles as a family retreat. However, pure investment properties are less likely to receive special protection.
Whether the property is a single seaside cottage or part of a growing portfolio, early specialist advice is crucial. The key issues are not simply who holds legal title, but how the asset functions economically within the marriage, and how best to achieve a fair outcome that enables both parties to move forward independently.