Airbnb and tenancies – what does the law say?3rd October 2016
Websites such as Airbnb are increasingly becoming more popular, where people advertise their homes online for short-term lettings. The Upper Tribunal (Lands Chamber) has held in the recent case of Iveta Nemcova and Fairfield Rents Limited (2016) that the short-term lets breached the user covenant not to use the premises “for any purpose whatsoever other than as a private residence”.
The facts in Iveta Nemcova and Fairfield Rents Limited (2016)
Fairfield Rents Limited (Fairfield) is the landlord and freeholder of the property, whilst Iveta Nemcova (Nemcova) was the tenant under a long lease, for a term of 99 years. The lease contained a covenant not to use the premises for any illegal or immoral purpose, or “for any purpose whatsoever other than as a private residence”. Fairfield made an application under section 168 (4) of the Commonhold and Leasehold Reform Act 2002 seeking a determination that Nemcova had breached the above covenant. This application was heard by the First-tier Tribunal (Property Chamber) on 5 August 2015.
Nemcova admitted making short term lettings of the flat and advertising its availability online, but argued that as she paid her council tax, utility bills and, despite the short-term lets, the flat had remained her main residence she was not in breach of the user covenant. Further evidence was provided that she only let the flat out for around 90 days a year and that she stayed at the flat about three or four nights each week.
The decision at first instance
It was submitted before the First-tier Tribunal by Nemcova that it was necessary to construe the lease as a whole when determining whether the covenant had been breached. It was noted that the lease did not contain provisions to restrict underletting or the granting of short term tenancies.
The Judge, however, disagreed with the submissions of Nemcova and held that the covenant required the flat to be occupied as a home, which requires a “degree of permanence”. Short-term letting of the type by Airbnb and other websites were not sufficiently permanent to qualify as occupation as a home.
Appeal at the Upper Tribunal (Lands Chamber)
On appeal the Upper Tribunal confirmed the effect of the clause was to “prohibit all uses save use as a private residence.”
It was held the duration of the occupation is an important factor when determining whether a property is being used for a private residence or not. Where a person occupies a property for days and then leaves, it is unlikely that the occupier would consider the property as their private residence, even for those days they are staying in the property. Accordingly, in granting short-term lettings it was found that Nemcova was in breach of her lease.
This case serves as a warning to tenants who let their property by way of Airbnb. All tenants should check their lease carefully before entering into an agreement with Airbnb.
For further information, please contact the Real Estate Disputes Team at Hamlins.