Thousands of apartment owners who rent out their homes on websites such as Airbnb are likely to be breaking the law, a court has ruled.
Homeowners whose leases state that their properties can be used “as a private residence only” cannot rent out their homes short term, the country’s highest property court has decided.
There are an estimated four million leaseholders in the UK.
The ruling means that thousands of home sharing website hosts may be letting their homes in breach of the law.
The leasehold ruling was made after a Slovakian interior designer and property developer fell out with neighbours at a riverside housing development in Enfield, north London, The Times reported.
Iveta Nemcova’s neighbours had become concerned about strangers regularly staying in the one-bedroom, first-floor flat. They asked the block’s freeholder to take action.
She admitted in court to renting out her property on the Airbnb, TripAdvisor and holidaylettings.com websites, as well as on her own lettings site.
She argued that she had remained within her lease’s “private residence use” clause because she paid the flat’s council tax and bills and because she stayed there “three or four days a week”.
Nemcova also pointed out that her lease contained no explicit bar on her charging people to stay in her flat short term while she wasn’t staying there.
But Upper Tribunal’s Land Chamber disagreed.
“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,” Judge Stuart Bridge ruled. “Granting very short-term lettings (days and weeks rather than months) . . . necessarily breaches the covenant.”
Giles Peaker, property specialist at Anthony Gold solicitors, said that the ruling had “huge significance” for short-term lettings companies such as Airbnb.
“In terms of practical consequences, this is serious for Airbnb, mainly because the ‘private residence’ clause is a common, but not universal, feature of leases,” he told the newspaper.
“While the tribunal’s ruling does not affect people who rent out rooms while they too are staying in the property, it is likely to affect the thousands who rent out whole properties on services like Airbnb.
“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.”
An Airbnb spokesman said: “We remind all hosts to check and follow local rules before they list their space.
“This is also made clear on our responsible hosting page, which contains useful information and resources on the rules for home sharing.”
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