Airbnb shock ruling – are you in breach of your lease?

The headlines may be designed to shock but the ruling last month in the case of Nemcova v. Fairfield Rents Ltd comes as a good reminder to those considering a listing on websites like Airbnb. Mrs Nemcova had been letting out her flat on a short term basis through a number of different websites and always on a very short term basis. When her neighbours complained to the management company the freeholder took legal action requiring her to stop, with a landlord and tenant dispute ensuing.

Mrs Nemocova‚Äôs lease contained a clause stating that the property could be used as a ‚Äúprivate residence‚ÄĚ only. She argued that this did not restrict the short term lettings because each new occupant was using her flat as a private residence. On appeal the court disagreed arguing that private residential use required a greater degree of permanence.

Given the popularity of Airbnb and similar websites there are doubtless hundreds of other people seeking to make an income from their properties and who may not be permitted to do so; those with leasehold properties and mortgages in particular should pay close attention to the terms. Whilst experts have been warning about this for some time this is the first high level case that has also sounded alarm bells.

If you are considering listing your property do check whether you permitted do so and consider the risks first. As the Sun was so keen to point out in its article, a freeholder can ultimately forfeit a residential lease for breach of covenant and whilst this is an extreme remedy it is not beyond the realms of possibility, particularly if temporary lettings are causing a nuisance to neighbours. Less extreme but potentially more devastating is the fact that using your property in this way may mean that you are in breach of your home insurance conditions and that an insurer would not pay out in the event of damage or destruction. If in doubt check… and then check again!

AIRBNB WARNING Thousands who rent out rooms through Airbnb could face losing their homes after landmark legal ruling
Leaseholders who breach their contract could face legal action by the freeholder - and ultimately lose their home