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31st October 2018

Recent case held flat owner in breach of lease for letting flat on Airbnb

The case of Bermondsey Exchange Freeholders LTD v Ninos Koumetto (as Trustee in Bankruptcy of Kevin Geoghehan Conway), heard in May but only recently published, highlights the potential dangers of listing leasehold properties for short term holiday lets on sites such as Airbnb.
Airbnb has, in recent years, become a well-known and easy way to let properties on short term, holiday arrangements. Often, lets will be for a matter of days or a week and can include beds for a larger number of people than the property would accommodate usually. Living next door to a holiday let can, however, present issues in terms of security, noise and disturbance and there have, in recent months, been headlines about the legal battles facing the company and opposition from local residents in cities around the world.

The facts of this specific case were that the Claimant was the freehold owner of a warehouse that had been converted into flats. The defendant was the long leaseholder of one of these flats and, after previously living in the property and then renting it under assured shorthold tenancy agreements, had advertised his property as a holiday let on sites such as Airbnb. The Claimant took issue with the Airbnb arrangement and was particularly concerned that the transient nature of the occupiers may present security issues and have a detrimental impact on the sense of community in the development. The Defendant argued against this, whilst also making the point that in any event such use was not prohibited under his lease.

However, the Claimant was successful in obtaining an injunction to prevent the leaseholder from advertising the property as a holiday let. The clauses which were considered relevant are not uncommon in leases of properties of this kind and it is important that leaseholders are aware of their meanings.

The County Court upheld the decision on appeal, finding that there had been a breach of the tenant covenant not to assign or underlet the flat without the prior written consent of the Landlord. It was decided that the Airbnb arrangements amounted to short lettings which in turn amounted to a breach of this covenant as the landlord has not given his consent. The Court also found there to be a breach of the user covenant, which was to use the flat as a residential flat for one family only. The fact it was being used as temporary accommodation for transient occupiers meant this was a breach. The Judge identified that there is a qualitative difference between letting a property on a short term basis to a person or family who occupy it as their home and letting it on a short term basis as a holiday let, the latter being viewed as a commercial deal.

The judgement serves as a warning for anyone seeking to advertise their properties on Airbnb, particularly those owned under a long lease. Leaseholders will have to carefully read the terms of their lease and understand whether such arrangements will be permitted or if Landlord consent would be required. On the other hand, the decision is likely to be welcomed by landlords and developers who do not want their properties being used for such short term, transient arrangements and who rely on the fact they will be used only for residential use. The clarification of this definition is therefore likely to become useful for future cases.

For further information please contact Ceri Riddell on 01226 532753 or click here to email Ceri.
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