I Want To Let Out A Spare Room On Airbnb Is This A Breach Of My Lease?

The popularity of Airbnb as an alternative to hotel rooms has seen a rapid rise in leaseholders making rooms or whole flats available to holidaymakers and others. It is increasingly seen as a business opportunity, especially where rents can be three times or more than an ordinary let. It has also lead to some City Authorities banning short term lets to combat the creation of “cheap party hotels” causing disruption to neighbours and the reduction of properties available for more traditional long term lets where rented accommodation is at a premium.

Is the leaseholder in breach of his or her lease in having rooms available under Airbnb and similar short term accommodation?

The Upper Tribunal in the recent case of Nemcova -v- Fairfield Rents Limited found the leaseholder was in breach. The leaseholder’s lease provided that she was not to assign, underlet or part with possession of only part of the premises and not use the premises or part of them for any illegal or immoral purpose or for any purpose whatsoever other than as a “private residence”. The principal issue was whether the leaseholder was using the property as her private residence.

The leaseholder’s own use of the one bedroom flat was very limited. She claimed it was her main residence but agreed that she did not occupy for 70% of the time because she felt intimidated by neighbours and she let it out mainly to business travellers for approximately 90 days a year. She advertised its availability through Airbnb, Trip Advisor and other websites including her own website. The whole flat was made available.

She maintained that she was not in breach of the lease as it was her main residence. It maintained the physical characteristics of a private residence. It was not a requirement of the lease that she had to be there.

The First-Tier Tribunal found in the first instance that using the ordinary meaning of the words in the lease the occupiers were not using the property as their home so must have been using it for another purpose which was a breach of the lease and, by extension of that, the leaseholder was using the property for an alternative use as well, that is for short term lets.

The Upper Tribunal, on appeal, found the lease prohibited the use of the flat for any use except as a private residence. For that to be achieved there had to be a degree of permanence in the leaseholder’s occupation of the property beyond weeknights or the occasional weekends. Here the occupation was so transient that the occupier could not be considered as staying at the flat as her main residence.

His Honour Judge Bridges therefore found that the leaseholder was in breach. He emphasised that this was a case specific on its facts and the interpretation of these words in the leaseholder’s particular lease and therefore the case did not give a definitive answer as to whether or not the leaseholders were able to offer accommodation such as Airbnb without being in breach of their lease.

It is however a global issue. In Australia, the Victoria Supreme Court found on appeal that it was wrong to say that guests only had a licence to occupy so were not tenants and there was no sub-letting. Melbourne City Authorities introduced legislation to control sub-letting. In Germany, Berlin and other cities have banned such short term lets.

Certainly any leaseholder will need to check the specific terms of their lease and be concerned for any potential breach, whether they could face complaints from neighbours for nuisance and whether insurance policies both for the contents and the building are affected or if specialist insurance should be taken out. There could of course be tax and potential planning breaches as well.

Similarly landlords will be concerned to know who is occupying the property, that it should be used on a permanent basis of occupiers being there rather than becoming a “cheap party hotel” and that there will be additional wear and tear where short term lets are taking place. It is unlikely that a landlord will agree to the alteration of the wording of a lease both because the character of the building may change and also because in any block or building with residential leases those leases will need to be consistent in their terms with each other and changing all the leases could be a complex and expensive exercise.

If you have any queries concerning the matters raised
please contact Jeremy Teall, Partner and Housing Management Team Leader on 020 8567 3477 or e-mail jteall@prince-evans.co.uk