The court has ruled for the first time that leaseholders could be in breach of their lease by letting out their property using Airbnb style websites. Brady Solicitors’ Carmela Inguanta explains the facts.

The recent case of Nemcova v Fairfield Rents Ltd was heard at the Upper Tribunal, which sought to answer the question:

If a leaseholder advertises their property for short term lets on websites such as Airbnb and grants a series of such lettings, do the leaseholder’s actions breach the lease covenant?

The facts, in brief

The lease contained a covenant not to use the premises for any purpose whatsoever other than as a private residence.

The leaseholder argued that there was a lack of restrictions on sub-letting and granting short-term tenancies, and, providing that the flat was being used as a private residence by someone, the circumstances of their occupation were immaterial.

The freeholder argued that the use was not as a private residence and not occupied as a home during the time it was sub-let.

The Upper Tribunal held that although an occupier may have more than one residence that they call home, there must be a degree of permanence for a property to be classed as a private residence. Short-term lets of days and weeks rather than months, as advertised on Airbnb or similar, are not considered to be the occupier’s private residence.

The decision

The Upper Tribunal found that granting short-term lettings breaches the covenant of private residency and therefore the breach of lease was upheld. The decision sets a precedent for any freeholders looking to take action against their leaseholders who are sub-letting their properties. The ruling affects leaseholders who are letting out their entire property and not those who let out one or more rooms while they remain living in the property as their private residence.

What does this mean for leaseholders and managing agents?

The ‘private residence’ lease clause is a common one and leaseholders doing or thinking about Airbnb lettings should check their leases immediately to avoid action being taken against them.

For information about the consequences of breaching your lease, read our earlier blog on Airbnb.

As a managing agent you also need to check your leases and know who is living in your blocks to ensure you are ready to take action against any leaseholders who are in breach of their lease.

Contact Brady Solicitors for further advice

If you are unsure about the terms of your lease when it comes to sub-letting or you are a managing agent who suspects a leaseholder is breaching their lease covenants, contact our leasehold specialists on 0115 985 3450 or drop us an email.