Blandy & Blandy LLP Solicitors

Insights // 05 March 2019

Short-Term Property Lettings – Profitable or Problematic?

Senior solicitor Pippa Lee, in our Dispute Resolution team, discusses problems that can arise for property owners (landlords) involved in short-term lettings through sites including Airbnb.

An increasing number of people are letting their properties out for short-term lets through sites such as Airbnb.

Such a letting can provide a good source of income for the homeowner. It can also offer a greater degree of flexibility for homeowners who intend to live in the property themselves at various points throughout the year, rather than let the property for a number of months or years exclusively to tenants.

As an arrangement such as an Airbnb letting is not considered to be a tenancy, the occupier does not have security of tenure. Instead, the occupier has a limited licence, personal to them, to use the accommodation for the duration of their stay. This means that if the occupier refuses to leave – it is much easier for the homeowner to remove the occupier and recover possession of the property than if the person had been in occupation under a tenancy.

However, some homeowners have got into difficulties as a result of letting their homes out for short-term lets. Owners of leasehold properties need to be particularly cautious because short-term lets could breach the provisions of their lease.

Landlords/freeholders are prepared to take enforcement action against leaseholders because of the disruption that short-term lets can have on them and other leaseholders. Complaints can arise from there being loud parties and because short-term occupiers may have a lack of concern for the appearance of common parts and a disregard for security of the property when letting in unknown visitors. For example, Landlords have taken action against leasehold owners for breach of alienation, user, planning and nuisance covenants. There may not be an express restriction or covenant in the lease which prohibits the homeowner from using the flat for holiday or short-term lets and it may not always be obvious from the wording of a particular provision whether a short-term let would amount to a breach. However, leaseholders have been caught out in such circumstances in recent case law.

In the case of Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC), the lease provided that the property was not to be used other than as “a private residence”. The Upper Tribunal (Lands Chamber) found that for the property to be used as “a private residence” there needed to be a ‘degree of permanence’ which would require a stay of more than a few days or a weekend. The Tribunal commented that there was a ‘transience’ associated with holiday letting and the occupier in those circumstances would not consider the property to be their “private residence”. As such, the leaseholder was found to be in breach of the user provision.

In the more recent case of Bermondsey Exchange Freeholder Ltd v Nino Koumetto (as Trustee in Bankruptcy of Kevin Geoghan Conway) (Central London CC, 1 May 2018) there were provisions not to part with or share possession of the whole flat, or to use the flat other than as a residential flat for the occupation of one family only. The Judge held that the leaseholder was in breach of the provisions in the lease and granted an injunction to restrict the leaseholder’s use of the property.

Each case is fact specific and depends on the construction of the covenants in the lease. In future we may see more residential leases containing specific provisions prohibiting holiday lets.

If you are a landlord of a building where sub-lettings are taking place which you are concerned are causing a nuisance and may be in breach of covenant then you should consider gathering evidence of the breach and take advice on the action you can take.

If you are thinking of letting your property out you should exercise caution and seek further advice before doing so.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Pippa Lee

Pippa Lee

Associate Solicitor, Dispute Resolution

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