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Case law: Flat owner finds requirement to use it only as a private residence makes renting flat out on Airbnb unlawful

Owners or tenants considering renting their flat out on Airbnb (the website allowing individuals to advertise and rent out their home or other property on a short-term let) or similar sites should check this does not breach their leases, following a recent case.

July 2018

This update was published in Legal Alert - July 2018

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 was in his flat so rarely that he decided to rent it out on Airbnb for about 90 days each year. The lease prohibited him from letting, subletting or licensing the flat, or parting with or sharing possession of it without the landlord's consent.

On the landlord's application for an injunction to stop him, the District Judge (DJ) ruled that the Airbnb lettings amounted to a subletting or licence in breach of the prohibition in the lease. The tenant had not obtained the landlord's consent.

The lease also contained very common restrictions prohibiting the tenant from using the flat "for any purpose whatsoever other than as a private residence".

The DJ also ruled that the tenant's multiple short-term Airbnb lets of the flat breached that provision in the lease because, during lets, the tenant was no longer using the flat as his private residence, and nor were the Airbnb renters. Just being there at weekends, or a few nights per week, was not enough. It also found that the flat could be differentiated from the purely residential flats around it because the amount of time it was rented out was creating additional nuisance and security issues, spoiling the sense of community in the block.

For these reasons, the injunction was granted, and this was upheld on appeal at the Central London County Court.

There may also be planning issues, given that letting property can affect which use category the property is in. Planning permission may be required.

Clauses in mortgages and insurance policies should also be checked to make sure that Airbnb lettings are not prohibited and do not require consent/covered by insurance.

Operative date

  • Now

Recommendation

  • Owners or tenants considering renting their flat out on Airbnb (or similar sites) should check they are not breaching their leases, mortgages, insurance policies, or any planning laws

Case ref: Bermondsey Exchange Freeholders Limited v Ninos Koumetto (as trustee in bankruptcy of Kevin Geoghehan Conway) Case No: B02LB714 (Central London County Court)

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.

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