Leaseholders who have taken advantage of Airbnb type short term lettings, may now be scrutinising their leases, following the decision of the Upper Tribunal (Lands Chamber) in the case of Nemcova v Fairfield Rents Limited.
Most residential long leases contain clauses specifying how the flat is to be used. Commonly the lease will prohibit the use of the flat for any purpose other than as a private residence or a private dwelling.
In Nemcova the Tribunal considered whether this type of obligation, which required the flat to be used as a private residence only, was breached by Airbnb short term lettings.
The Tribunal considered that:
• the covenant did not require the flat to be used as the private residence of the leaseholder; but
• the observance of the covenant did require each occupier to use the flat as their private residence. In the Tribunal’s view this would involve a degree of permanence and so residing for a few nights would not be sufficient.
In the context of the specific clause in the lease, the leaseholder was found to be in breach of covenant by granting very short term lettings.
The Tribunal made the point that whether a leaseholder will be in breach of their lease if they let on this kind of short term basis will depend upon the construction of the particular covenant in its own factual context. However, given the growing popularity of this kind of letting, there are likely to be many leaseholders who are in breach of the terms of their leases.
