With the growth of AirBnB and similar services there has been a large increase in the number of home owners letting out their properties to raise money from holiday lettings. Flat owners, however, face a number of hurdles before they can exploit their properties in this way. A leaseholder’s occupation of the flat is governed by terms of the lease and sometimes those terms do not permit this activity, as one leaseholder found to her cost early in September 2016.
Some leases contain prohibitions against letting out on short term lets and holiday lets. Most contain a requirement that the flat can only be used as ‘a private residence’. The courts have heard cases about the interpretation of this phrase since at least as far back as 1925. In the latest one, Nemcova v Fairfield Rents Ltd, the Upper Lands Tribunal did not agree with the tenant that a restriction in her lease, only permitting her to use the flat as ‘a private residence’, allowed her to let it out to businessmen who stayed a few days there on business or holiday makers who signed up on her website to use the flat for a week.
These persons were not using the flat as their ‘private residence’. In fact they had left their residences temporarily and were staying in her flat for a different purpose. While she would be able to let the flat on an Assured Shorthold Tenancy to someone who wanted to live there (as the lease did not prevent it – some leases do however), the nature of the short term lets was not residential. They already had their own residences and were not intending to vacate them.
The Tribunal followed the previous decisions over the years in making it clear that each lease had to be interpreted on its own wording. However the words used in this particular lease are very commonly found in residential leases and there may be other provisions in the lease which also prohibit this type activity. This decision is likely to affect many flat owners who are thinking about setting up a secondary income stream in this way.
Mark Barrett is Head of the Commercial Dept at Lawson Lewis Blakers Ltd. If you would like us to advise on this or any other property law issue please press the ‘Contact Us’ link and let us know your problem.