Are AirBnB Hosts Letting Themselves In For Legal Trouble?

The boom in AirBnB style lettings has given holiday-makers a great deal more choice, but it is causing some concerns for landlords who fear their tenants may be letting out their homes in breach of their lease.

This is undoubtedly the case in many incidences, and a recent legal case highlights what action a landlord can take if this is happening in their property.

A recent case involving a London landlord and his tenant, Bermondsey Exchange Freeholders Limited v Ninos Koumetto, highlights the possible consequences of using residential property in this way, where that property is restricted by the existence of covenants.

In this case, the tenant of a long residential lease in a block of flats had begun letting his home as temporary accommodation through online agencies such as AirBnB. The landlord raised various concerns, relating to potential security issues and increased nuisance due to the added comings and goings of the temporary visitors. Legal action was brought against the tenant for breach of their lease. The terms found in the lease are standard terms which can be found in most residential leases, including:

• A prohibition on parting with, sharing possession of, or permitting a person or company to share occupation of the flat except through an assignment of the lease, or by underlease to which the landlord has consented
• A restriction that the property is only to be used for residential purposes in the occupation of one family only

On appeal the Court found that letting the flat through AirBnB amounted to a breach of both of the terms set out above. The short-term letting amounted to a sublet or licence to which the landlord had not consented. Also, the arrangement constituted a commercial use and therefore breached the restriction in relation to use as a residential property.

This decision is likely to be welcomed by landlords. It is often felt that short-term holiday letting has a detrimental effect on the security, level of nuisance and the community-feel of a block of flats. This case gives landlords the assurance that, providing their leases contain similar terms, pursuing an action for breach of those terms under these circumstances is likely to prove successful.

It is unclear whether the impact of this judgment could also cover restrictions imposed on freehold property - it is not unusual to see covenants restricting the use of freehold property to use for residential purposes only. However, this case is clear in its view that short-term holiday letting to paying visitors amounts to commercial hire of the premises. So, on this basis, it would be wise for the owners of both leasehold and freehold property to proceed with caution.

For further information on this topic, call Sarah Davies on 01792 529617 or email sarah.davies@jcpsolicitors.co.uk

Sarah Davies is a member of the Property Litigation Association, and has been recommended by the Legal 500 2016 edition. Sarah's reputation for excellence has secured her a portfolio of clients ranging from individuals to Commoners Associations and Farmers to Commercial and Residential Property Landlords and Professionals.