Guest Blog by Matthew Lewis*
Putting a flat on Airbnb to make some extra cash sounds tempting – but advice to leaseholders remains the same, always check the terms of the lease first!
The media* has reported that an elderly woman is being evicted from her leasehold flat in London after she let it out on Airbnb and her neighbours complained of noise. She was given six months to sell up and leave.
Holiday lets – whether using Airbnb or traditional methods – have long been a cause of angst when it comes to residential leasehold property.
Subject to the fine wording of the lease, there is plenty of case law confirming that it can be a breach of covenant to turn a leasehold flat into a holiday let.
Most leases have a clause to the effect that the property is for continuous residential occupation by a single family (not a string of holidaymakers).
There may be other relevant clauses such as one stating that the property should not be used for commercial purposes.
But leaseholders may be unlikely to suffer the wrath of their freeholder/neighbours if they’re simply typing quietly on a laptop in a bedroom office. The ‘commercial use’ clause is more likely to kick in if any business activity becomes a nuisance to others.
Could A Leaseholder Lose Their Home If They Are In Breach?
Yes, in theory. Forfeiture of the lease is a very real danger. And it’s commonly the first thing a freeholder will threaten to do – for two reasons:
In most cases it never happens because the leaseholder has no choice but to follow the covenants they agreed to when they signed the lease. It’s either that or they face losing their home.
Beware These Common Restrictive Covenants
Covenants vary from lease to lease and from area to area – even within the same town. As a rule of thumb, they tend to be stricter in high net worth properties.
* Matthew Lewis is a Partner and Head of Residential Leasehold Property at Coles Miller LLP. For more information about covenants and other leasehold matters you can contact Matthew on T: 01202 355697 E: firstname.lastname@example.org
The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this article, we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited, trading as Deacon, accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.