Long leases and short-term lets – have you been tempted?

There are many who occupy property under a lease, for whom the temptation of making some extra money whilst they are not at home is therefore, all the more attractive.

In the case of Bermondsey Exchange Freeholders Limited v Ninons Koumetto (as Trustee in Bankruptcy of Kevin Geoghehan Conway) (2018), the terms of a 999-year lease were considered after Mr. Conway, (the leaseholder of a flat in the Bermondsey Exchange building in South London) was accused by his lessor of breaching the terms of his lease.

At first, Mr. Conway started subletting the flat on assured shorthold tenancies but, from 2015, he began using his flat to provide short-term temporary accommodation through Airbnb and other such platforms.

His landlord freeholder sought an injunction to prevent such temporary lettings, raising concerns about security, nuisance and a detrimental impact on the sense of community.

Mr. Conway denied such use of his flat and argued that, even if he had, it did not constitute a breach of his lease. His landlord had overwhelming evidence to show otherwise, including website listings, e-mail reviews and photographs. 

Given the evidence, DJ Desai at Lambeth County Court decided in favour of the landlord, granting the injunction and finding that Mr. Conway had “widely advertised the flat on Airbnb and similar websites for letting”, in clear breach of the lease. The judge considered the letting through such websites as ‘akin to holiday lets’.

Mr. Conway became bankrupt shortly before the judgment but his trustee in bankruptcy appealed against the judgment, on the issue of whether he had breached his lease and on remedy – whether or not the injunction should have been granted and on what terms.

The appeal was rejected on all grounds and the injunction was upheld (albeit with different wording). The judge found:

  • Airbnb lettings amount to a subletting or licence, in breach of the alienation clause in the lease which prohibited the tenant from parting with or sharing possession, except by an assignment or underlease with landlord consent; and,
  • That by using the flat as he had, Mr. Conway had breached the user lease clause in the lease, which prevented use of it other than as a residential flat occupied by one family only. As there was evidence of a series of short-term lettings providing temporary accommodation for paying transient visitors, this was a clear breach of the user covenant.

Summary

Whilst there are more people letting out property through such websites, there have also been concerns voiced by hoteliers about the lack of regulation of such arrangements as well as the potential breach of planning controls.

In respect of the legal complexities, this case shows that much will depend on the particular lease and the clauses in question. The terms of Mr. Conway’s lease were standard user and alienation clauses, found in most leases. It is clear that without prior permission for such lettings, leaseholders could find themselves in breach of their lease, risking court proceedings and their own accommodation in the process.

If you are a landlord or tenant and need help with a legal claim, get in touch with us today on 0203 146 3549 / e:mail: [email protected].uk

Disclaimer

All our articles are intended for informational purposes only and do not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information provided.

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