Renting out your flat via Airbnb

Jul 10, 2019

If you own a flat, it may be tempting to rent it out whilst you are on holiday or for longer, to earn some extra income. However, a recent court case held that renting a flat out on Airbnb breached the tenant’s lease.

In the case of Bermondsey Exchange Freeholders Limited v Nino Koumetto (as a Trustee in bankruptcy of Kevin Conway) [2018] 4 WLUK 619, Mr Conway owned a flat in South London which he could rent out. He first rented the property out on Assured Shorthold Tenancies, for at least six months at a time, but then he started to rent the flat out on a more short-term basis through Airbnb and other websites. The lease relating to the flat had the following clauses:

  1. The leaseholder (Mr Conway) was not allowed to part with or share possession of the flat or permitting any company or person to occupy the flat other than by way of assignment (selling the flat to a new owner) or underlease (letting the property to someone else)
  2. Mr Conway was not allowed to assign or underlet the property without the prior written consent of the landlord, Bermondsey Exchange Freeholders Limited.
  3. The flat could only be used as a residential property, to be occupied by one family.

    Bermondsey Exchange Freeholders Limited were concerned about the additional nuisance and security issues possessed by the property being rented out on Airbnb. They were also worried that the rentals on Airbnb would diminish the sense of community amongst the other leaseholders in the building, if the property was used by many different people for short periods at a time. Consequently, Bermondsey Exchange Freeholders Limited obtained an injunction to stop Mr Conway from renting the flat out in this way. 

    Mr Conway went bankrupt before the injunction and his trustee in bankruptcy appealed the injunction. However, the Central London County Court rejected the appeal and confirmed the injunction should stay in place. The court held letting a property out on Airbnb amounted to a short term sublet or a licence to part with possession, which was a breach of the lease.

Additionally, the court decided there was a further breach of the lease as the property was not being used on a residential basis, but rather a commercial hire use, as it was being rented out on a short-term basis to paying customers.

Therefore, if you are considering letting out your flat, you should read your lease carefully first to check to see if it has similar clauses, because if there are such clauses in your lease then you too could potentially be in breach of the lease. The landlord of your property could take costly legal action against you for breaching the Lease including in some circumstances, taking the lease back from you, so you would no longer own the property.

The above is a brief guide to recent case law on the subject of short term lettings. If you are concerned about whether your rental is a breach of your lease or are thinking about buying a leasehold flat then please do not hesitate to contact Leanne Wood via email or call her on 01276 686 222, for advice or assistance.

 

 

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