Could letting your property through Airbnb breach your lease?

If you are the owner of leasehold premises, and you have considered sub-letting your property on a short term basis, then you should have consideration to the recent case of Bermondsey Exchange Freeholders Limited v Ninos Koumetto (trustee in bankruptcy for Kevin Conway) (2018) (“Bermondsey”). In Bermondsey, the defendant – Mr Conway –let his flat on temporary lets through websites such as Airbnb. The landlord took issue with the flat being used as temporary accommodation due to security issues and the effect on the atmosphere within the building as a whole. The landlord requested that Mr. Conway stop the temporary lettings; however this request was ignored. The Landlord issued proceedings to enforce the lease.

When the matter reached court, Mr. Conway denied having let the property on short term lets, however advertisements for the flat were produced as evidence that the flat had been let via Airbnb. The court held this to be a breach of the lease in the first instance and an injunction was granted. Mr. Conway later appealed (via his then Trustee in Bankruptcy), contending that the lease did not prohibit temporary holiday lettings; however the appeal was rejected on the basis that there was a clause which expressly specified that the flat was not to be used for any other purpose than as a residential flat for the occupation of one family only; and the short-term holiday lets did not constitute “residential use” (in fact they constituted commercial hire). In any event, no consent had been provided by the landlord.

If you are considering buying a leasehold property to sub-let, or if you are thinking of sub-letting an existing leasehold property, you should consider the terms of the lease carefully to see what type of subletting is permitted, if any. If sub-letting is allowed, there may be restrictions or conditions in connection with the sub-letting, which may be complex. Failure to abide by covenants (or restrictions) within a lease, will result in breach of the lease which in turn could result in you receiving a CCJ, or at worst, your lease being forfeited.

Whilst this article concentrates on a breach of the lease, if your property is mortgaged, you will very likely also have to considered your mortgage conditions, as these will likely be restrictive in some form in relation to sub-letting, even if your mortgage is a buy-to-let mortgage. If you would like to discuss an existing lease or a new lease, either commercial or residential, please do not hesitate to contact our dedicated Real Estate Litigation Department for a confidential discussion on 01702 338338 or llancaster@paulrobinson.co.uk.