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‘Air BnB’ style lettings and lease restrictions

Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC)

A decision from the Upper Tribunal (Lands Chamber) have held that short ‘Air BnB’ type lettings of a flat were in breach of covenant in the lease of the flat.

The facts of this case in particular are that Mr Nemcova, owned the long lease of a flat which contained a restrictive covenant to restrict use of the property to use as a private residence. Mr Nemcova advertised the flat for short- term lettings on the internet and subsequently granted a series of short term lettings. The freeholder then sued for breach of the user covenant. The First Tier Tribunal held that Mr Nemcova breached the user covenant. In applying the natural meaning of the words, “private residence” as a home, Mr Nemcova was in breach as his sub-tenants were not occupying the property as their home as it was on a short term basis. Mr Nemcova appealed the decision which was subsequently dismissed.

The property was required to be used as “a” private residence and not specifically Mr Nemcova’s residence, this was not the grounds on which he breached the covenant. The duration of the occupation was the material consideration by the court. Specifically Mr Nemcova’s short term lettings were for a matter of days or weeks.

A previous decision in Caradon District Council v Paton [2000] 3 EGLR 57, the court confirmed where an owner enters into a contractual relationship with others to allow them to use the property on a short term basis, that use is not as a private dwelling house. The Court of Appeal has also previously decided that where a house has a room given to a paying guest, this will also not classify as a private dwelling house use only (Tendler v Sproule [1947] 1 All ER 193)

Top Tip: Owner of flats wanting to let their property on a holiday/ short term basis should seek advice on the terms of their lease and also on other aspects such as planning law.

For advice on matter related to letting of properties please contact Chris Sykes head of our property team.