On 1 May 2018, appeal court judges agreed that a leaseholder was in breach of his lease and continued an injunction preventing him from letting out his flat on Airbnb.

The growing popularity of Airbnb and other online temporary letting agencies is creating fertile ground for disputes between leaseholders and their management companies and freeholders.

Brady Solicitors first wrote in 2016 about the risks of letting a leasehold property on Airbnb, and the most recent case to be heard on the topic has confirmed that leaseholders risk being in clear breach of their lease if they let out their flat on a temporary basis.

This case* concerned a leaseholder – Kevin Conway – who owned on of 18 flats in a converted warehouse in South London. The freehold of the block is owned by the leaseholders, with each flat owner having one share.

What happened in the Conway case?

In 2015, after lawfully letting out his flat on a series of assured shorthold tenancies, Mr Conway started using Airbnb and other online temporary letting agencies.

The freehold owners (Mr Conway’s fellow leaseholders) got fed up of the stream of temporary residents to the flat and took their case to Lambeth County Court to request an injunction.

They argued that Mr Conway was in breach of his lease, that the temporary lettings were damaging to the building’s community, and that they had not given consent for the flat to be used in such a manner.

The County Court judge found that it was a breach of the lease and applied the injunction.

At the appeal on 1 May, the judge at Central London County Court was asked to consider the breach and also the injunction.

The appeal judge upheld the decision on both counts – the leaseholder was firmly in breach of his lease and the injunction was continued.

What did the residential lease say?

Mr Conway’s lease contained a set of covenants that are common to most residential long leases. These covenants included:

  • Not to part with or share possession of the whole of the flat or permit any company or person to occupy the flat save by way of an assignment or underlease of the whole of the flat.
  • Not to assign or underlet the whole of the flat without the prior written consent of the landlord.
  • Not to use or permit the use of flat or any part thereof otherwise than as a residential flat with the occupation of one family only.

The County Court found Mr Conway to be in breach of all three covenants, a decision that was upheld at appeal.

Our advice for management companies and managing agents

This case makes it clear that a leaseholder cannot let their flat on Airbnb without breaching the terms of their lease.  The advice from the property management experts at Brady Solicitors is to:

  1. Check the terms of the lease and the covenants that your leaseholders have agreed to.
  2. Make it clear to your leaseholders that Airbnb and similar lettings will put them in breach of their lease.
  3. Keep an eye on Airbnb and other websites to make sure that properties in your developments are not being let on a temporary basis without your permission.
  4. Ensure any new leaseholders are aware of the position.
  5. If you are involved with a new leasehold development, ensure your residential leases include covenants to enable temporary lets to be managed or curtailed if needed.

And for leaseholders?

The short term gain from a temporary let on Airbnb can be tempting – but you run the risk of a breach of lease claim and all that it entails. Before considering letting out your leasehold property on Airbnb or similar websites, make sure you understand what covenants you have signed up to in your lease – and talk to your management company or landlord.

For help or advice, please get in touch with the team at Brady Solicitors.

If you found this article useful, why not check out the Brady Solicitors Leasehold Resource Centre?

 

*Bermondsey Exchange Freeholders Limited v Ninos Koumetto (as Trustee in Bankruptcy of Kevin Geoghegan Conway)