Understanding Airbnb: A Guide for Leaseholders

Airbnb has transformed the way people travel, offering convenient and often cost-effective accommodation options. While Airbnb can provide an additional income stream for leaseholders, it is essential to navigate the legal landscape carefully. Always prioritise compliance with your lease, local rules, and your mortgage terms to avoid potential legal issues.

It is also important to maintain good relationships with your freeholder and neighbours.

Remember, the legal landscape surrounding short-term rentals is evolving, and it is crucial to stay informed about any changes.

Key legal rules

1. 90-Day Rule (Greater London)
   In the Greater London area properties cannot be rented out for short-term stays for more than 90 nights per calendar year without obtaining planning permission from the local borough council.
2. Short-term Letting Register:
   As of the date of this article, there is no UK-wide mandatory register for short-term lets. However, some local authorities have introduced their own registration schemes. The UK government has proposed a national short-term lets register, but it is not yet in force. Leaseholders should check their local authority’s requirements.

Legal Considerations for Leaseholders

Before listing a property on Airbnb, leaseholders should carefully review their leases looking out in particular for:

1. Subletting Restrictions: Some leases may prohibit subletting entirely, while others may require the freeholder’s prior written permission.
2. Use Restrictions: Many leases specify that the property must be used as a “private residence” or for “single family occupation.”

Potential Risks and Consequences

1. Breach of Lease: Unauthorised subletting or misuse of the property can lead to legal action from the freeholder.
2. Forfeiture: In extreme cases, breaching lease terms could result in forfeiture of the lease.
3. Neighbour complaints: Frequent short-term rentals might lead to complaints from neighbours about noise or disturbance.

Best Practices for Leaseholders

1. Obtain Written Permission: If your lease requires it, always get written consent from your freeholder before listing on Airbnb.
2. Respect Use Restrictions: Ensure that your Airbnb activities align with the specified use of the property in your lease.
3. Monitor Local rules: Stay informed about planning law and council laws regarding short-term lettings.
4. Review Mortgage Terms and Insurance Policies: Confirm that short-term lets do not violate mortgage terms or jeopardise building insurance cover.
5. Communicate with Neighbours: Maintain positive relationships with neighbours by addressing any concerns they may have about your guests.
6. Legal advice: You may wish to consult legal professionals about your specific circumstances before listing the property.

Case law

A number of court and tribunal cases have considered and ruled upon the implications of certain clauses in a lease when it comes to short-term letting, for example:

• Nemcova v Fairfield Rents Ltd (2016): The Upper Tribunal (Lands Chamber) held that short-term lettings breached a covenant to use the property as a “private residence” as transient guests do not establish residence.
• Bermondsey Exchange Freeholders Ltd v Koumetto (2018): The Central London County court found that Airbnb lettings breached covenants against subletting without consent and using the property for occupation by one family only.
• Triplerose Limited v. Beattie (2020): The Upper Tribunal (Lands Chamber) ruled that short-term lets through platforms like Airbnb breached the covenant to use the property “as a private dwelling house for occupation by one family at any one time”. However, the Tribunal also held that this use did not constitute carrying on a business in the flat.

The case law reflects judicial interpretations based on individual lease terms. Outcomes may vary depending on lease wording and facts.