Property Litigation specialist lawyer, Will Bartley, provides an update on how Airbnb style lettings of residential flats can be problematic for leaseholders, who could be in breach of their lease without knowing it.
What is Airbnb letting?
Airbnb has become a popular letting website, whereby property owners rent out their properties on a short-term let basis, i.e. for a week or so. This could be for as brief a period as a night, or as long a period as a month or two.
What is a short-term letting?
Short term letting would essentially be potentially anything falling short of an assured shorthold tenancy agreement.
It is a popular way of making income from a property that may only be vacant for a brief period,such as your home, or by letting out a holiday flat on a regular basis over the summer for a more substantial income revenue.
This occurs on the popular site Airbnb, but also on other similar websites offering the same service.
Are short-term lettings allowed in a block of flats?
“I live in a flat and the leasehold owners of the flat below have been letting out their property on short-term letting websites”.
Case law and the Courts have addressed this question on numerous occasions since the Airbnb rise in popularity over the past 5 years.
Whilst each case will rest on its own merits, and more than likely come down to a Solicitor’s interpretation of the individual flat lease, the answer has been an almost resounding no – it is not permitted.
Why aren’t short-term lets permitted in block flats?
There are a number of factors as to why this has been the conclusion of the Courts. The majority of residential flat leases will contain wording in them preventing the following:
- Preventing the leaseholder from running a business from their property;
- Diminishing the nature and character of the block;
- Not to cause a nuisance or annoyance to their neighbours or neighbouring properties;
- Not to let their property on a short-term basis.
Short-term lettings have been found to breach most, if not all, of the above clauses found in many leases. There is also a risk that offending leaseholders will be breaching the buildings insurance, or their own mortgage terms, due to the change in nature of the property. This therefore can have severe repercussions for leaseholders.
What happens if my neighbour is breaching their lease by permitting short-term letting?
The freeholder or management company for the block can commence forfeiture proceedings against the offending leaseholder.
This will likely include an Application to the Property Tribunal to determine the breach of the lease, followed by a S146 Notice warning of forfeiture, and then resulting County Court proceedings.
Whilst forfeiture is not granted lightly by the Courts due to the severe financial penalty it imposes on the leaseholder in question, the Courts will provide such an Order in certain circumstances if the practice of short-term letting is not stopped without delay by the offending leaseholder.
Who would be liable for the legal costs?
In the majority of circumstances, the leaseholder in question will also be liable for any legal costs incurred in contemplation of forfeiture proceedings, which can be highly costly for an individual to bear, and certainly not worth the income of the short-term let.
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