Respected legal firm Mishcon de Reya is the latest voice warning of problems which can be caused when apartment owners let out their properties ‘privately’ through short-let platforms such as Airbnb.
In its latest Property Update to clients and the media, the firm draws attention to a recent property tribunal decision on the case of Nemcova v Fairfield Rents Limited.
The Upper Tribunal - England's highest specialist property court - ruled that where a lease says the property must be used only "as a private residence", then the leaseholder is not allowed to let it out for very short periods.
The case revolves around the owner of an apartment in Enfield in north London, a Ms Nemcova, who owned her property on a 99 year lease which contained a covenant "Not to use the premises … for any purpose whatsoever other than as a private residence".
However, Nemcova let out her flat via Airbnb, Trip Advisor and her own lettings site, causing friction with other leaseholders in the block who were concerned about strangers regularly staying in the flat for short periods. They asked the freeholder to take action.
Mishcon de Reya says Nemcova accepted that she was granting short term lets, but she still paid council tax and utility bills for the flat and therefore she felt that it was still her main residence, although it was often left vacant.
She also contended that most of her renters were business visitors, not holiday makers, and that the property retained the physical characteristics of a private residence, irrespective of who lived there and for how long.
However, the tribunal decided that the short term lets were a breach of the lease with Judge Stuart Bridge stating: "In order for a property to be used as the occupier's private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights in the week. Granting very short term lettings (days and weeks rather than months) … is a breach of this covenant."
Mishcon de Reya says the problems that led to this case chimed with other complaints it had become aware of. “Having numerous individuals coming and going and, in the case of secured blocks, having access to the common areas can create security concerns for other leaseholders as well as noise and nuisance issues” says the firm.
It says that each case will be fact-specific and will depend on the exact wording of the lease as well as the length of the lettings. “It is likely that a tenancy granted for a term of, say, six months or more will not fall foul of the typical covenant wording, but short lets of a few days or weeks now risk an injunction, a damages claim or even forfeiture of the lease” the firm warns.