Airbnb has 4 million listings worldwide and is becoming an attractive way of home owners renting out their properties, but at what cost?

In May 2018, Appeal Court Judges upheld an injunction which stopped a leaseholder from renting his flat out on Airbnb and other online agencies, confirming that it was a breach of lease.

In this case, Mr Conway started renting out his flat using assured shorthold tenancies. In 2015, Mr Conway changed the way he rented his flat and used Airbnb and other such websites. The freehold owner of the block of flats (which was a company made up of other leasehold owners) expressed concerns about the temporary residents renting Mr Conway’s flat. The issues raised were that with temporary residents, the block of flats wouldn’t be as secure, there would be more nuisance and the flats wouldn’t have the same “sense of community”. The freehold owner therefore sought an injunction to stop Mr Conway from renting out his flat in this way.

In 2016 District Judge Desai held that Mr Conway’s lease prohibited his flat to be used in this way and granted the injunction sought by the freehold owner. Mr Conway’s Trustee in Bankruptcy (Mr Conway had been made bankrupt after the Judgment) appealed the decision of District Judge Desai on the grounds that his lease didn’t “prevent or inhibit such use of the flat” and “even if it did an injunction ought not to have been granted”.

The Appeal was rejected because Mr Conway had breached the following clauses of his lease:

  1. Clause 2.10 said “not to part with or share possession of the whole of the Demised Premises or permit any company or person to occupy the same save by way of an assignment or under lease of the whole of the Demised Premises”. This was breached by Mr Conway parting with possession of the property as well not using an under lease or assignment.
  2. Clause 2.10 also said “Without prejudice to the absolute prohibitions hereinbefore contained not to assign or underlet the whole of the Demised Premises without the prior written consent of the Landlord”. This was breached as no consent was given.
  3. Clause 2.4 said “Not to use or permit the use of the Demised Premises or any part thereof otherwise than as a residential flat with the occupation of one family only...” This was breached as renting through Airbnb meant that the property was not being used as a residential flat.

Judge Luba QC said that “there is a qualitative difference between letting a property on an assured shorthold basis to a person or family who occupies the same property as their home, and letting the property on a short term let including through Airbnb and other websites”.

With an increase in short term lets, such as Airbnb, it is likely we will continue to see these types of cases being brought before the Courts. Management Companies should make sure that their leaseholders are not breaching their leases by renting out their properties in this way.