Holiday lettings happening in your building?

We thought the below might be of interest, the article is an update provided to us by ARMA

AIRBNB LETTINGS A BREACH OF LEASE – BERMONDSEY EXCHANGE FREEHOLDERS LTD V NINOS KOUMETTO (AS TRUSTEE IN BANKRUPTCY OF KEVIN CONWAY)

LEGAL UPDATES

This case was initially heard in the County Court where the freeholder presented substantial and compelling evidence that the leaseholder, Ninos Koumetto, had advertised and let his flat via Airbnb.  The County Court found that the leaseholder had breached covenants in his lease:

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”. The Judge found that the Defendant had “breached that term in that he has parted with possession of the property”. In the alternative, he was in breach because he had “allowed other persons to occupy the property other than by way of assignment or underlease of the whole”

“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.” As to that sub-clause the Judge held that “it is not in dispute the Defendant had not obtained the prior written consent for letting the property through Airbnb and other websites. The Defendant therefore has breached the term by underletting the property effectively for holiday lets through Airbnb”

The Judge held that provision of the flat to hirers through Airbnb amounted to “letting, akin to holiday lets”. She held that such hirers “are not using the property as a residential flat”. As she put it, “There is a qualitative difference between letting a property on an assured shorthold basis to a person or family who occupies the same property as their home… and letting the property on a short term let including through Airbnb and other websites”.

Even though this letting activity had ceased by the time of the Court hearing, the Judge considered it still appropriate to grant an injunction.

The leaseholder was given leave to appeal however the appeal judge agreed with the original decision saying ‘For my part, I am in entire agreement with the Judge. The user covenant is clear. Clause 2.4 is breached when the flat is not being used as a residential flat but as short­ term temporary accommodation for transient visitors paying for such use by way of commercial hire. Just such a breach was found by the Judge in the instant case and I can detect no error in that finding’

Copy of the case can be downloaded from here