Leasehold owners could be breaking the law with Airbnb

A leasehold flat owner was breaking the law by renting out her property on Airbnb, it has been ruled.

The Upper Tribunal’s Land Chamber – which has the equivalent of High Court status and so can set precedents – ruled that the property’s lease stated it was a “private residence only”. There was no specific prohibition.

However, the fact that it was a private lease meant the flat could not be rented out for short periods. Many leaseholds have the same ‘private residence’ clause stipulated.

In the case, Iveta Nemcova, who owned a leasehold property in Enfield, north London, rented it out for a few days a week.

Neighbours complained to the freeholder about strangers regularly staying in the one-bed flat, sparking the legal case.

Judge Stuart Bridge ruled: “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) [….] necessarily breaches the covenant [not to use the property as anything other than a private residence].”

Property lawyer Giles Peaker, who works for law firm Anthony Gold, said the ruling has “huge significance”, although it would only affect people letting out whole properties on sites such as Airbnb, and not those letting out rooms while they themselves remain living in the property.

He said: “Anyone doing Airbnb lettings in a leasehold flat should immediately check their lease, because if the freeholder decides to take action for a finding of breach of lease on that clause, this is a clear precedent that such a use would certainly be a breach. And the consequence of breaching a leasehold agreement are serious.

“You can face legal proceedings, be forced to pay legal costs and ultimately may have to forfeit your lease.”

Data scraping organisation Inside Airbnb say Airbnb has 2,645 properties available for short-term rent in London with over half listed as being “entire homes and apartments”.

Entirely separately, Zoopla has said that Airbnb references appearing on some property listings are simply adverts.

The Airbnb adverts appear immediately to the right of the headline house price – but not on all listings.

One agent said he had been astonished to find the adverts and felt that they would encourage property investors and landlords to go for lucrative 90-day lets rather than Assured Shorthold Tenancies – while bypassing agents.

In London, concerns have been flagged that a number of landlords are breaking Airbnb’s own 90-day rule, and advertising the property for longer periods, bypassing AST legal requirements as well as agents.

Other concerns are that tenants use Airbnb for sub-letting purposes.

However, a spokesperson for Zoopla said: “It is just an ad that appears from time to time on our site, usually in the house prices section. Nothing more than that.”

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Written by: Houseladder