Airbnb Ruling – Caution for Hosts

December 2, 2016

The Airbnb Ruling from the Upper Tribunal’s Land Chamber in September has huge significance for those tempted to advertise their properties on websites, such as Airbnb.

The above Ruling determined that a leasehold flat owner was in breach of her lease by renting out her property on Airbnb. The Lease contained a covenant not to use the premises “for any purpose whatsoever other than as a private residence”.

The Tenant had made short term lettings of the flat following advertising its availability on websites similar to Airbnb. “Private Residence Only” clauses are a common feature of leases and are frequently seen in transfers of property, particularly new build property.

The facts in the above case were that the Tenant stayed at the flat approximately 3 to 4 days in the week and had let the flat out for about 90 days a year. The above short term lettings were held by the Tribunal to have breached the private residence only covenant.  The Tribunal stated there must be “a degree of permanence going beyond being there for a weekend or a few nights a week.” The Tribunal went on to say “the occupation is transient, so transient that the occupier would not consider the property he or she is staying in as being his or her private residence, even for the time being”.

Whilst the Ruling does caution that each lease is different, the decision will be of concern to many potential hosts.

Anyone intending hosting Airbnb style lettings should check their title documents carefully to ensure they are entitled to do so, as being in breach of covenant, particularly where the property is leasehold, can have serious consequences. A tenant can face legal proceedings, paying legal costs or ultimately having its lease forfeited.

It is noteable that the Tribunal’s Ruling does not affect people who rent out rooms while they too are staying in the property.

In addition to checking title, it is worthwhile to add that if a property is mortgaged or charged, then the terms and conditions of the Bank’s mortgage or charge deed should also be checked to ensure there is no breach.

DISCLAIMER:-

This article is not to be relied upon and is provided for information purposes only. Anyone seeking legal advice in relation to issues related to the above article should obtain professional legal advice in relation to their particular circumstances.  Please contact the Property Team or Patricia Cronin on p.cronin@cfrlaw.co.uk