18 November 2016 by Yezdan Izzet

“All up in the Air” – Will an Airbnb style short term letting result in a breach of your lease?

Airbnb type short-term sublettings are becoming an increasingly popular option for leasehold owners of flats to make additional income from their properties.  There are estimated to be over 2 million properties listed worldwide on Airbnb’s website.  However, it is not popular with everyone.  Many landlords and leaseholders are taking issue with flats in their buildings being used for such short-term lettings.  But are such short-term lettings unlawful and in breach of your long lease?  This question was recently considered by the Upper Tribunal (Lands Chamber) in the case of Nemcova v Fairfield Rents Ltd, where it was held in that particular case that the Airbnb style short-term lettings did amount to a breach of the terms of the long lease.

Most long residential leases contain covenants imposed on the leaseholder not to deal with their property in certain ways, and typically include a prohibition against subletting or it may allow the leaseholder to sublet only with the landlord’s prior consent.  In the case of Nemcova, the lease did not contain any material restrictions against subletting.  The landlord Fairfield Rents Ltd therefore sought a determination from the Upper Tribunal that the leaseholder was in breach of the private user provision in the lease by subletting it out on Airbnb lets.  The Nemcova case turned on the interpretation of the user clause in this lease which provided that the leaseholder was “Not to use the [Property] … other than as a private residence”.

The leaseholder Ms Nemcova admitted that she had granted a series of short-term lettings of the property, mainly to business professionals and holiday makers, using Airbnb and other similar websites. Fairfield argued that the short term nature of these Airbnb style sublettings did not constitute use as a private residence.  Ms Nemcova countered this argument by claiming that irrespective of the very short duration of each of these short lettings, her subtenants had all used her flat as a private residence.

The Upper Tribunal decided that whilst Ms Nemcova’s lease contemplated that people other than the leaseholder could use the property as “a private residence”, emphasis was placed on the specific wording which stated “a” private residence and not some other wording, such as “the” private residence. The Tribunal recognized that individuals could have more than one residence at a time.  However, the duration of the sublettings was considered material by the Tribunal which held that “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”.  The Tribunal accordingly held that the occupiers of those Airbnb style short-term lettings could not be said to have occupied the property as “a” private residence.

The Tribunal made clear that this decision was based specifically on the facts of the case.  The decision in Nemcova does not give either landlords, leaseholders, or letting agents, the certainty that the market was looking for.  However, the case is important in that it highlights for long leaseholders the serious risk they are taking in subletting their flats on Airbnb style short lettings, as they may face action being taken against them by their landlord for forfeiture.  It is important for landlords and leaseholders alike to carefully check the provisions of their long leases.

If you are a landlord or a tenant and require any advice on the issues discussed in this article, then please contact us at info@boltburdon.co.uk

You can also contact one of our other solicitors in the Property Disputes team here.

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