Thinking of Short Term Letting?

By Rosa Maria Kane

Short term letting of your home is an increasingly attractive option for homeowners. There are a number of online platforms, the most famous being Airbnb, which allow owners to advertise their rooms and flats to paying visitors.

The attractions of being able to generate income from short term lettings are obvious, but the perils are not always so clear.

Owners of leasehold property should check that they do not have any clauses in the lease or mortgage which prevent them from letting out the property in this way.

Many leases will contain detailed “alienation” provisions, which prevent sub-letting in its entirety or without the consent of the landlord. If your lease does not contain this prohibition, there are a number of other common lease clauses which could come into play. Your lease may contain a covenant not to use the property for business purposes, which could very well be engaged if you provide short-term lettings at the property.

A recent case in the Upper Tribunal, Nemcova –v- Fairfield Rents Ltd [2016] UKUT 303 (LC), considered whether a tenant was in breach of her lease by granting a series of short term lets where her lease contained a clause which stated “not to use the premises……………for any other purpose whatsoever other than as a private residence”.

The leaseholder estimated that she let the flat out for approximately 90 days a year, primarily to business users, as opposed to holiday makers. The Upper Tribunal found she was in breach of the aforementioned clause. Its reasons were that the leaseholder’s occupation of the flat was not sufficiently permanent for it to be considered a private residence.

Many other leaseholders who wish to let out their properties but who have such a clause in their lease may also find themselves in breach, although the Tribunal stressed that each case would be decided on its own facts.

Leaseholders who wish to let out their flats on a short term basis should carefully consider the terms of their lease and the potential benefits. In theory as a worst case scenario, the landlord could forfeit the lease if there have been breaches. Fortunately there are many protections in place for the leaseholder before that can arise. Most likely, the freeholder will instruct professionals to deal with the breach, either by seeking an injunction or starting tribunal proceedings, and the professionals' fees could well be payable by the tenant under the terms of the lease. Not considering the terms of the lease at the outset, before starting short term letting, could therefore turn into a costly mistake.

One way to deal with this issue is to seek the consent of the landlord in advance to short term lettings. A landlord is likely to be more willing to grant consent before the potential breach has happened, particularly if the consent can be framed to deal with any concerns it may have (such as nuisance to other residents).

In addition to the provisions of the lease, the tenant will need to consider whether their flat complies with Health and Safety law, the terms of their mortgage, and contents insurance and Planning Law. What is advertised as a relatively hassle free process by Airbnb and others may not always be the case. Should you be considering such a letting on a regular or significant basis and are unsure of the situation having considered your lease a prudent course would be to obtain legal advice first.

For further assistance and advice, contact Rosa-Maria Kane on 0207 467 5760 or at Rosa-Maria Kane is a solicitor in our Property Litigation department

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