Everyone has heard of Airbnb: it is an online marketplace enabling people to book a short term let with an Airbnb ‘host’ – some listings involve staying with the host and some allow the entire property to be let. There are other websites such as Vacation Rentals by Owner (VRBO), Flipkey, Homestay, Homeaway, Wimdu and others, but Airbnb alone has over 3,000,000 lodging listings in 65,000 cities: in Kensington alone there are over 200 listings available to book currently.

Allowing strangers into your property is not without obvious risk, and the press have reported stories where the host returned to find holes battered into his closet, axe marks on the door and computer and ID documents stolen; and where the host returned to find their flat had been used for a wild party with 200 guests spilling out over the entire building and fighting with neighbours: the police had been called 5 times.

The risks also extend to legal issues. Properties which are owned through a mortgage or a lease will be subject to restrictions on their use, and those can extend to an effective bar on using Airbnb.

Landlords of properties where leaseholders are using Airbnb will need to be alert to the implications for the building and the terms of the leases including:

  • alienation provisions – the lease may prohibit sub-letting or parting with possession without consent (or unless it is in the form of an Assured Shorthold Tenancy)
  • nuisance – the lease may require the tenant “not to undertake any action which amounts to a nuisance or annoyance to the landlord or other residents”
  • insurance – the tenant may covenant “not to undertake any action which risks increasing the premium payable under any insurance policy”
  • business use – the tenant may covenant “not to carry on any business in the premises”. There has been a number of cases (e.g. Thorn v Madden [1925] Ch 847; Tendler v Sproule [1947] 1 All ER 193) which confirm that that letting to paying guests/lodgers amounts to a business
  • private residence - the tenant may covenant “not to use the Demised Premises or permit them to be used for any purpose whatsoever other than as a private residence”
  • breach of planning – Local Authorities are required to grant licences in London for more than 90-days worth of short-term lets per year. If the tenant is letting the property for short-term lets for over 90 days each year without a licence, they will be in breach of planning legislation.

For a landlord faced with a stubborn tenant the only option might to take advice about what legal remedies are available, including an injunction to stop the immediate breach; or forfeiture (i.e. termination) of the lease which, after a long process, can lead to the tenant losing their lease if the behaviour is not stopped.

A recent case called Nemcova v Fairfield has helped clarify how the Courts will interpret an Airbnb arrangement.

Ms Nemcova was the leaseholder of a residential flat granted for a term of 99 years who used Airbnb. Her lease included two potentially relevant covenants:

  • “Not to use the Demised Premises…for any purpose…other than as a private residence"
  • "Not to do or permit to be done any act or thing in or upon the Demised Premises…which may be or grow to be a damage nuisance or annoyance to the Lessor or the Company or any of the occupiers of other flats in the Property...”

The neighbouring leaseholders complained, and the landlord was able to persuade that the Airbnb arrangement was in breach of the tenant’s covenants. Perhaps unhelpfully the Tribunal was reluctant to make an general ruling except to say that “Each case is fact-specific, depending upon the construction of the particular covenant in its own factual context. It is not possible therefore to give a definitive answer to the question posed at the beginning of this ruling save to say somewhat obliquely that ‘it all depends’.”

The Tribunal looked at a range of factors but did indicate that the duration of the short term let is the decisive issue in determining whether a private residence covenant has been breached. It concluded: “…in order for a property to be used as the occupier’s private residence,  there must be a degree of permanence going beyond being there for a weekend or a few nights in the week…I do not consider that where a person occupies for a matter of days and then leaves it can be said that during the period of occupation he or she is using the property as his or her private residence…the occupation is transient…”.

Concerned landlords or tenants should gather evidence of whatever the situation is and then, if they remain concerned, seek legal advice about how the problem might be resolved. It is important to note that the (sometimes limited) terms of a lease have usually been very heavily supplemented by extensive legal protections granted to leaseholders by legislation. Generally a prompt response to a problem will help ensure that legal rights are not lost or compromised.