Does your lease specifically deal with Airbnb type short-lettings?

A recent County Court case has shown once again the importance of ensuring that new leases of residential properties contain express provisions setting out whether or not tenants are allowed to enter into Airbnb type short-letting arrangements.

The case of Bermondsey Exchange Freeholders Limited v Ninos Koumetto (Koumetto), decided in May last year, concerned a freeholder seeking an injunction to prevent the tenant of a residential flat from entering into short-lettings of his flat which had been advertised on Airbnb after the tenant had moved out.

The lease of the flat contained one particular tenant covenant that the freeholder relied on which provided as follows:

“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 an assignment or underlease of the whole of the Demised Premises”

On appeal, the judge concluded that this covenant was “designed to capture both unauthorised leases and unauthorised licences” and on that basis the tenant was not entitled to enter into short-lettings and the injunction was granted. What is worth noting is that while many residential leases provide that the tenant will not part with or share occupation of part only of the premises, they often only contain covenants restricting assignment and underletting of the whole of the premises and are silent on the subject of allowing the tenant part with or share occupation of the whole. Where a lease does not expressly prohibit parting with occupation of the whole of the premises, it arguably allows tenants to enter into short-letting arrangements of the whole of the premises by way of short-term licences to occupy.

In 2016 the Upper Tribunal (Lands Chamber) looked at a similar situation in the case of Iveta Nemcova v Fairfield Rents Limited (Nemcova) where the lease provided that the tenant would not “during the last seven years of the term assign underlet or part with the possession of the whole of the Demised Premises or any part of them without the previous consent in writing of the Lessor” and would not “assign underlet or part with the possession of part only of the Demised Premises”.

In this case, the judge on appeal noted specifically that “it would have been possible at the time the lease was granted for greater restrictions to have been imposed, for instance on the grant of short-term lettings or occupational licences, but none were” and as a result, was of the view that the alienation provisions of the lease did not prevent short-lettings. However, in this case the appeal judge held that short-lettings did breach the covenant in the lease to not use the premises other than as “a private residence”. For a property to be used as the occupier’s private residence “there must be a degree of permanence”, and people staying in a property for just a few days could not be said to be using the premises as their residence.

What is clear from both of these cases is that, whilst they found that short-lettings were prohibited by the respective leases, they turned on very specific provisions within those leases and do not provide general guidance on the subject of whether short-lettings are permitted. The appeal judge in Nemcova concluded at the end of his judgement that “each case is fact-specific, depending on the construction of the particular covenant” and we would recommend that all new leases of residential properties expressly deal with whether or not short-lettings are permitted, rather than having to rely on other provisions to control short-lettings.

If you would like any more information in relation to the above, please contact James Davies or any member of the Edwin Coe Property Team.

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