The case of Iveta Nemcova v Fairfield Rents Limited has served as a warning to residential property owners who are part of the Airbnb generation.
The case involved a residential leaseholder of a property in a block of flats where the lease contained a covenant “not to use the demised premises or permit them to be used for any illegal or immoral purpose or for any other purpose than as a private residence”.
The leaseholder let their property out on short lets (a few nights and weekends). The neighbours in the block of flats noticed strangers using the property and asked the Landlord to take action.
The question posed was whether the advertisement of the property for short term lettings on Airbnb a breach of the covenant in the lease?
Although the answer was somewhat vague with an “it all depends” answer in recognition of the need to take each case on its merits, the emphasis was placed on the strict reading of the lease. It was considered that the Airbnb short term lettings constituted a breach of the covenant to use the property as a “private residence” as there was no “degree of permanence”. A degree of permanence was considered as “going beyond being there for a weekend or a few nights in the week”.
Tenants v landlords
This strict reading of the lease should sound an alarm for all owners of residential properties who have or who are intending to advertise their property on Airbnb and also to Landlords who have tenants in occupation who may be thinking of doing so.
Tenants should be looking at the wording of their lease as a whole to establish whether there is a covenant on use or alienation preventing short term lettings. They should also look at mortgage terms and buildings insurance policy wording as these too may prohibit Airbnb lettings. A breach of lease and mortgage conditions and an invalidated insurance policy could leave a tenant seriously out of pocket and in extreme cases without a home.
Landlords should be mindful to ensure that their leases contain watertight user and alienation provisions if they wish to prohibit Airbnb – style short term rentals. They should record any breaches of which they become aware and take prompt action where necessary.