Airbnb and breach of lease

Andrew Lane looks at recent cases in relation to Airbnb-type accommodation and tenancy agreements.

I have written previously about Airbnb-type accommodation and the potential impact of its use on tenancy and long lease agreements. To recap and summarise by way of:

1. A lessee had breached a covenant in her lease not to use her flat other than as a private residence by granting a series of short-term lettings of the property. The fact that the lessee had granted the lettings meant that her occupation of the flat was so transient and not sufficiently permanent that she would not consider the property her private residence: Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC); [2017] 1 P. & C.R. 4.
2. The lessees of a flat let on a long residential lease had breached a covenant restricting the use of the flat to use as a private dwelling when they made it available for short-term occupation via the “Airbnb” and “Booking.com” websites. However, such activity did not breach a covenant prohibiting the carrying on of a trade or business “upon the property”; there was a distinction between using premises as a business resource and carrying on a business “upon” the premises: Triplerose Ltd v Beattie [2020] UKUT 180 (LC); [2020] H.L.R. 37.
3. HHJ Luba KC dismissed an appeal against the granting of an injunction which prevented use of demised premises for short-term lets: Bermondsey Exchange Freeholders Ltd v Ninos Koumetto (2018):

“40. I remind myself that Clause 2.10(2) provides that the Tenant covenants: 

“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”. 

41. Where the Tenant parts with possession of the whole to another, that would usually provide the other with exclusive possession and amount to a letting. Where the Tenant allows another to ‘share’ possession that would usually be a reference to a licence to occupy. 

42. I accept Mr Sefton’s submission that, on a proper construction, this sub-Clause prohibits both parting with or sharing possession of the premises, on the one hand, and, on the other hand, permitting someone to occupy the premises.”

“60. I turn then to the User covenant (Clause 2.4) which, it will be recalled, provides that the Tenant is: 

“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…” 

66. 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.”

2023 saw two cases addressing these issues. In Charles Hunt (Holdings) Ltd v 77-82 Bridle Close Freehold Ltd [2023] UKUT 32 (LC); [2023] R.V.R. 137, a collective enfranchisement case, the Upper Tribunal confirmed that all six leases in the property prohibited sub-letting:

“25. We regard that finding as contrary to the plain words of the covenant. It requires the tenant to occupy. It cannot be equated with covenants seen elsewhere which require the tenant, for example, not to use or permit the flat to be used “for any purpose other than as a private dwellinghouse for occupation by one family at any one time”. That was the covenant in issue in Triplerose Limited v Beattie [2020] UKUT 180 (LC), to which the FTT referred, where the Tribunal found that short-term Airbnb-type lettings were in breach of covenant. But this covenant goes much further and is quite different in its wording and effect.

26. We note that previous FTT and county court decisions about this covenant have found that it prohibits sub-letting; none of those decisions is binding on the Tribunal but we observe that those decisions were correct.”

More recently, on 28 November 2023, the First-tier Tribunal (Property Chamber), in City of Westminster v Ben-Soussan LON/00BK/LBC/2023/0051, found that the tenant had breached their lease, by short-term letting (Airbnb) between 12-17 July 2023, where it provided:

“Not to use or permit the Premises to be used other than as a single private residence for occupation by an individual or an individual and his family as his or their only or principal home”.

Paragraph 21 of the judgment concluded:

“The Tribunal finds, on a balance of probabilities, that the short-term occupation by paying strangers between the period of 12 July and 17 July 2023 means that the Property was being used in breach of clause 18(a). The advertising of the Property on websites means that the property was available to all. It was occupied by a paying guest for the relevant period (namely 12 July to 17 July 2023), and therefore it was not used as a single private residence by an individual or his family as their only or principal home given that it was being used for short-term occupation by a paying stranger.”

Andrew Lane is a barrister at Cornerstone Barristers. This article first appeared on the Cornerstone on Social Housing Fraud blog.