With over two million registered lettings worldwide in 191 countries, Airbnb has completely transformed the holiday lettings market since its advent in 2008. Given this rapid expansion, it is increasingly prudent for landlords and tenants to consider how best to mitigate the risks associated with short-term lettings.

On 6 September 2016, the Upper Tribunal (Lands Chamber) handed down some useful guidance in Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC) as to how the courts may approach the interpretation of user covenants in this context. In the case, the tenant (T) had a long term lease, under which T was “[n]ot to use the Demised Premises or permit them to be used for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence.” T let out the flat for approximately 90 days a year on seven separate occasions. The landlord sought a determination under section 168(4) of the Commonhold and Leasehold Reform Act 2002 for forfeiture of the tenancy.

The Upper Tribunal dismissed the appeal and held that T had breached the private residence covenant in the lease. In interpreting the clause in the “ordinary and natural meaning of the words used”, the Tribunal held that the indefinite article (a private residence) demonstrated that “there is no requirement that the occupier is using the property as his or her only (or main, or principal) residence.” However, the Tribunal did acknowledge that this wording also inferred a “connection between the occupier and the residence such that the occupier would think of it as his or her residence albeit not without limit of time”. In order to demonstrate use of a property as a private residence, it would be necessary to evidence a “degree of permanency” in occupation “going beyond being there for a weekend or a few nights in the week.”

Practical tips

Whilst the Tribunal stressed that this case was fact-specific, there a number of practical considerations that arise out of the Tribunal’s decision. Landlords and tenants should check the terms of their lease in order to establish the breadth of any user covenants. As a landlord, where you suspect it is being breached, you should begin to catalogue evidence, such as advertisements, photographs and reports of anti-social behaviour. For leasehold tenants, it may be necessary to refer the issue to the superior freeholder, who should then pursue methods of enforcement, such as forfeiture.