The Airbnb ruling - a wake-up call for leasehold tenants

Airbnb is now an increasingly popular way of finding anything from a quirky night away in a windmill to a convenient short-term base in a major city.  However, when booking a stay, not much consideration will usually be given to the ability of the Airbnb host to legally offer up that accommodation on a short-term basis. When looking at the host's profile picture, would you really consider asking them about the terms of their lease, over asking about the nearest tube station?

In the last fortnight, this is a topic that the Upper Tribunal Land Chamber has addressed; specifically, giving guidance on what is meant by the phrase "a private residence" which is commonly found in leases.  A phrase also found, in this case, in the lease of Iveta Nemcova.

Iveta Nemcova leased a one-bed flat in a riverside housing development in Enfield, London.  Iveta had posted her flat on Airbnb and other similar sites for short-term letting.  On average, she stayed in the flat between 3-4 days a week and let the flat on a short term basis for around 90 days a year.

Whilst Iveta may have enjoyed the extra income, her neighbours became increasingly concerned at the turn-over of visitors regularly staying at the flat and in the end those neighbours asked the development's freeholder to take action.

The determination that the Upper Tribunal Land Chamber was therefore asked to make by the freeholder was as to whether a tenant would be in breach of its lease in making the leased property available for short-term letting when the lease contained a covenant not to use the property "for any purpose whatsoever other than as a private residence".

The Upper Tribunal Land Chamber found in favour of the freehold owner and that Iveta was therefore in breach of her lease.  It said "in order for a property to be used as the occupier's private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights in the week".  Further, that "occupation is transient, so transient that the occupier would not consider the property he or she is staying in as being his or her private residence even for the time being".  "Granting very short term lettings (days and weeks rather than months) … breaches the covenant [not to use the property as anything other than a private residence]."

Whilst this ruling does not affect those tenants who host rooms on sites like Airbnb when they are also in the property, it will affect those who regularly rent out the whole of their property on a short-term or holiday basis.  Tenants who therefore wish to go down the Airbnb route will need to ensure that the terms of their lease permits them to do so.  If it doesn't, they are at serious risk of their landlord taking successful action against them.

For landlords, the ruling will come as a welcome surprise; a binding precedent for when these circumstances arise.  For Airbnb and similar sites?  Time will tell.  Ultimately, their position is not going to be affected as they are not a party to the lease but the consequences of being in breach of their lease, may put tenants off in the long-run.

If you have any queries arising from this article, would like to suggest a topic for a future article or wish to discuss a contentious property issue, contact Chris Drinkall, Head of Rollits LLP Property Dispute Resolution Team on 01482 337367 or christopher.drinkall@rollits.com .

Posted on: 04/10/2016

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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