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Case law: Covenants in residential leases may mean short-term Airbnb-style lets of property are unlawful

Residential tenants proposing to let their flats for short periods should check their lease covenants (as well as any clear prohibitions against letting and the like) in case covenants against use other than as a private residence make it unlawful, a recent tribunal decision makes clear.

Legal Alert

This update was published in Legal Alert - November 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A tenant held a 99-year lease of a flat near London. As she was often there just a few days each week, she let the property on short-term lets to business visitors who responded to her adverts on websites such as Airbnb, for about 90 days each year.

Her lease did not:

  • require her to use the flat as her main residence;
  • prevent her from letting the flat in this way;
  • prevent her from selling or underletting.

However, it did contain a covenant not to use the property "for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence". Other occupiers of the block complained to the landlord, who took legal proceedings against her.

The Upper Tribunal (Lands Chamber) ruled that advertising the property on the internet and granting multiple short-term lets breached the covenant as it meant the flat was no longer being used as a private residence. There was therefore a breach of the covenant in her lease.

It said that the use of 'a' private residence was significant as it did not necessarily mean the flat had to be 'the' private residence of the tenant – she could have another private residence which was, for example, her permanent home. However, the definition did require a connection between the occupier and the residence, so that the occupier of the flat must consider it their private residence while they were occupying it.

In this case the occupiers were not occupying the flat for long enough to think of it as their private residence - the lets were too short. The Tribunal said the occupier had to be there for more than a few nights a week, or just at weekends, otherwise there was not enough permanence for them to feel it was their private residence rather than, say, an alternative to a hotel room.

Operative date

  • Now

Recommendation

  • Residential tenants proposing to let their flats for short periods should check their lease covenants first (as well as any clear prohibitions against letting and the like) in case covenants against use other than as a private residence would make it unlawful

Case ref: Nemcova v Fairfield Rents Ltd [2016] UKUT 303

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.