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Short-Term Lettings Breached 'Private Residence' Covenant
Property owners who let out their homes on a short-term basis, using Airbnb or other websites, should take very careful note of a tribunal’s ruling that a long leaseholder who advertised for temporary occupants of her flat breached the terms of her lease.
The woman’s 90-year lease contained a restrictive covenant in common form which required that the flat should not be used for any purpose whatsoever, other than as a private residence. She advertised the property online and let it, largely to business visitors to the UK, for very short periods, often of only a few days. The First-tier Tribunal found that, by so doing, she had breached the covenant.
In challenging that ruling before the Upper Tribunal (UT), the woman pointed out that the lease contained no relevant restrictions on under-letting or the granting of short-term leases or licences. There was no requirement that she should reside in the flat herself or occupy it as her principal home.
She contended that the flat retained all the physical characteristics of a private residence and that, so long as it was being used as a private residence by someone, the circumstances of the occupation were immaterial. However, the freeholders of the flat argued that the covenant was in place to protect other tenants of the block, who preferred to have owner-occupiers or long-term tenants as their neighbours.
In rejecting the tenant’s appeal, the UT found that, on a true interpretation of the covenant, it implied a degree of permanence, going beyond that of a weekend or a few nights’ occupation. The short-term lets were so transient that occupiers would not consider the flat their private residence, even for the time being. In granting lettings for days, or weeks, rather than months, the tenant necessarily breached the covenant.