A long lease contains a covenant not to use the demised premises or permit them to be used for any illegal or immoral purpose or for any purpose whatsoever other than as “a private residence”. Is it a breach of that covenant if the leaseholder becomes an Airbnb host and uses the property to provide accommodation for Airbnb customers?
Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC) concerned the lease of a flat. The tenant confirmed that she had granted a series of short-term lettings, usually to business visitors working in London, when she was not there. She stated that the flat remained her main residence, although it was occupied by Airbnb guests for about 90 days a year, and drew the tribunal’s attention to the fact that the lease did not require her to reside in the flat herself or to occupy it as her principal home. Furthermore, the lease did not contain any covenants prohibiting business or commercial use.
The tribunal considered previous authorities, but ruled that each lease is different; and so is each clause. This lease did not contain any restriction on alienation of the property as a whole (except in the last seven years of the term). The landlord could have imposed restrictions on the grant of short-term lettings, occupational licences or holiday lets, or expressly required the tenant to reside in the premises or even to occupy the premises as his or her only or principal home. But the lease made no such provision.
The lease explicitly stated that the property was to be used “as a private residence”. It did not require the occupier to use the premises as his or her home. Furthermore, the clause did not state that the premises were to be used as “the private residence” of the leaseholder; it required use as “a private residence”. The use of the indefinite article (“a”) was significant. A person may have more than one residence at any one time; a permanent residence that he or she calls home, as well as other temporary residences which he or she uses while away from home on business or on holiday.
The tribunal did not consider that the fact that the flat might be occupied by a third party had any effect on the nature of the use. The flat would remain “a private residence”, whether it was occupied by a sub-tenant or a friend. However, the duration of such occupation was material and, in this case, the occupation was so transient that the flat could not be described as a private residence of the Airbnb guests. There must be a degree of permanence going beyond being there for a weekend or a few nights in the week. Therefore, the grant of very short term lettings (measured in days and weeks rather than months) did constitute a breach of the covenant under consideration.
Anecdotal evidence suggests that growing numbers of landlords are launching possession proceedings against tenants who sublet their properties through Airbnb, or who make similar arrangements, without permission. This decision highlights the importance of checking the legal position carefully before entering into such arrangements. They could result in costly legal proceedings and have serious repercussions.
Allyson Colby is a property law consultant