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AIRBNBEWARE: VERY SHORT TERM LETTINGS AND BREACH OF COVENANT

The Upper Tribunal (Lands Chamber) recently had cause to consider the proper construction of private use covenants, in the case of Nemcova v Fairfield Rents Limited [2016] UKUT 303 (LC). The lease in question contained a covenant in the following terms, ‘Not to use the Demised Premises… for any purpose whatsoever other than as a private residence’. The tenant admitted granting a series of short-term lets and advertising the property as such online. But she had only let it for around 90 days per year and resided at the property (a flat) 3 – 4 nights a week. She paid the Council Tax and utility bills. In essence, the tenant contended that the property remained her main residence and as such she had not breached the covenant. But, in an application by the freeholder under section 168(4) of the Commonhold and Leasehold Reform Act 2002 seeking a determination of breach, that argument was rejected both at first instance and on appeal to the Upper Tribunal. The Upper Tribunal held that the effect of the covenant cited above was to prohibit use which did not constitute use as a private residence. Whilst the lease contemplated use by persons other than the lessee, where that person occupied only for a matter of days, he or she was not using the property as a private residence because the occupation was so transient that the occupier would not consider the property as being for the time being his or her private residence. A distinction was drawn between lettings of days and weeks rather than months. But as much as HHJ Bridge stressed that each case is fact-specific, this will function as a warning to those who seek to let via Airbnb or similar arrangements to ensure that they will not thereby be in breach of covenant.

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