Long Leaseholders Beware if Letting Rooms or Whole Flat Under Airbnb Style Arrangements

In the recent case of Bermondsey Exchange Freeholders Limited v Ninos Koumetto (as Trustee in Bankruptcy of Kevin Geoghegan Conway), the flat owner had advertised his entire flat as available for bookings on the Airbnb platform. The claimant’s position was that such arrangements increased the potential for additional nuisance and security issues to the detriment of the development as a whole.  The defendant took the view that he was not using the flat for non residential purposes and was not prevented by the terms of his lease from doing so.

The material covenants in the lease were

  • Not at any time to assign sublet or part with possession of part only of the demised premises.
  • Not to part with or share possession of the whole of the demised premises or permit any company or person to occupy the same save by way of assignment or underlease of the whole of the demised premises.
  • Without prejudice to the absolute prohibitions hereinbefore contained not to assign or underlet the whole of the demised premises without the prior written consent of the landlord.
  • Not to use or permit the use of the demised premises or any part thereof otherwise than as a residential flat with the occupation of one family only.

The appeal court decided that the arrangements for the letting of the entire flat on Airbnb  constituted breaches  of the last  3 covenants  in  the 999 year  residential  lease  deeming the offering of the entire flat for  Airbnb bookings to amount to short term holiday lets to transient visitors,  without the landlords consent. It also upheld the principle of the earlier injunction preventing him from continuing to let out his flat on Airbnb platform.

Although many of the other flats within the development were let out on assured shorthold tenancies, the court found that Airbnb style letting amounted to a breach of covenants against subletting without the landlord’s consent and a breach of the user covenant requiring the flat to be used as a “residential flat with the occupation of one family only”.

Points of Note for Lessees

  • If you are a long residential leaseholder your lease is likely to include a whole host of covenants and restrictions on use and on different types of underlettings and you may need to get your superior landlord’s consent to Airbnb style arrangements.
  • If the lease contains express prohibitions or otherwise requires the landlords consent you will be in breach of your lease if you proceed with any lettings, with all the risks associated with breach.
  • If you have a mortgage you should also check the terms of your mortgage as well for any additional restriction in the mortgage terms.
  • If you wish to consider Airbnb as an option, talk to your landlord and/or management company to ascertain their views, on this type of arrangement as a large increase in the volume ‘transient’ visitors can be contentious, particularly if it impacts upon the use and enjoyment or increases costs to other long terms occupiers or on the overall character of the block.
  • If necessary take further advice before taking any risks.

Points of Note for Landlords

  • Check the terms of your lessees’ leases for the wording of any restrictions on subletting arrangements.
  • Consider what ‘policy’ you wish to adopt and notify the lessees of this if Airbnb is a potential issue.
  • Consider checking the Airbnb website and similar lettings sites if you suspect a breach may be occurring without your permission and write to the relevant lessee in clear terms, reminding them of the restrictions in the lease.
  • On all new leases ensure the lease contains appropriate covenants to restrict this type of arrangement, if casual transient lettings may impact upon the character of the block or result in complaints from other long leaseholders.