If you own or rent a property in central London then it’s likely you will at some point have considered or may be considering making some extra cash by putting your property on a popular holiday letting site such as Airbnb. Rates for prime areas in central London can be very attractive and the beauty of short-term letting is that it allows you to generate revenue without signing away your property on a long term contract. Indeed, in the present rental market many Landlords are finding that numerous short-term lettings over the course of a year is more lucrative than a traditional longer term letting. However, as people are becoming increasingly aware, this style of letting can be extremely problematic. In this article we look at some of the many questions we get regarding short term letting.
What is a short-term letting?
For a letting to be considered short-term the total term must be no more than six months in length. In reality, due to the rise in popularity of holiday letting sites such as Airbnb, the vast majority of short-term lettings in London, and therefore the major focus of this article, are lettings for periods significantly shorter than 6 months and typically anywhere between one night and a few weeks.
Is Airbnb letting legal?
This depends mainly on two things, the terms of your lease or tenancy agreement and your local council regulations. If your property is a freehold then council regulations are the main consideration. Whether freehold or leasehold you will also have to check that short-term letting doesn’t invalidate the terms of your insurance or mortgage agreements.
There are a few sections of your lease which are relevant to this question chief amongst them is what your lease or tenancy agreement says specifically about the permissibility of short-term letting. How each lease treats this is quite varied but it is certainly very rare for a lease to offer the tenant unlimited discretion in this area. The vast majority of tenancy agreements will not allow any form of subletting whatsoever. Your lease will also contain a clause detailing the property’s ‘permitted use’ which in the case of residential properties is typically restricted to use as a residential dwelling for single family occupancy or some other such wording with a similar meaning. In the case of Nemcova v Fairfield it was confirmed by the courts that a series of very short lettings in the style of Airbnb holiday lettings equates to a breach of this clause. Another common and relevant lease clause in the context of holiday lettings is the covenant not to disturb or cause nuisance to other tenants in the building. Clearly whether you are falling foul of this covenant will hinge on your particular set of facts and the types of guests you are hosting but frequent short-term lettings are by their very nature likely to be considered disruptive to other residents.
In summary it is far more likely than not that a series of short-term lettings would cause one or more breaches of the terms of your lease.
Your local council will also have specific regulations related to holiday lettings which you need to check. In Greater London for example local council regulations prohibit you from letting out on a short-term basis for more than a total of 90 nights in any given calendar year unless you obtain a special planning permission (please note that the council regulations define a short-term let as less than 90 nights rather than 6 months). This applies to both leasehold and freehold properties.
Amongst other regulations there are also likely to be restrictions on the maximum number of people permitted to reside at your property at any one time which you need to be wary of in the context of holiday lettings.
What happens if I breach the terms of my lease or council regulations?
With regards to a breach of lease this depends firstly on whether or not your Landlord is aware that you are in breach of your lease (they will usually notify you in writing once they have discovered a breach). Secondly, once the Landlord is aware of a breach, what action they are prepared to take.
Should a Landlord discover that a tenant is in breach of lease they are obligated to write to their tenant putting them on notice that they are in breach. If at this point the tenant does not desist with their offending action then the Landlord has the right to apply to the Residential Property Tribunal for the ultimate sanction, forfeiture of lease (termination), and the property transfers back to the freehold. If your Landlord calls you out on a flagrant breach of lease we would strongly advise that you cease any sub-letting immediately and seek professional legal advice. It is also important to mention that the above still applies in situations where a share in the freehold is owned.
Breaches of council regulations can lead to actions being taken against you by your local council. Failure to comply with the 90 night regulation for example can lead to formal planning enforcement action and an Enforcement Notice being issued. Non-compliance with an Enforcement Notice is a criminal offence and anyone found guilty could face an unlimited fine in the Magistrates’ or Crown Court.
What can I do if I live in a leasehold property and I want to do short-term lettings ?
Discuss the issues with the Landlord, or in the case of a share of freehold, with your neighbours and co – freeholders. We know of several cases where residents of leasehold apartments have successfully sought licences from their Landlord to conduct short term-lettings. Alternatively, leases can be varied.
What else needs to be considered?
Practically speaking there are other common issues we frequently come across when dealing with this type of letting. Often when people let out to tenants on a short term basis they do not take out the sort of deposit that normally accompanies a traditional tenancy, leaving Landlords vulnerable to damage caused by careless holidaymakers that then return abroad making it virtually impossible to hold them accountable through the courts. Furthermore, holiday lettings can cause major problems with neighbours that often have to put up with noisy bachelor and hen parties e.t.c.
In other cases people have taken out and paid for properties for a few nights and subsequently refused to leave. In this scenario entering the property and changing the locks is simply not an option as this is a criminal offence under the Protection From Eviction Act 1977, leaving the Landlord with no choice but to go through a lengthy and expensive legal process to recover their property.
Amongst other considerations it is important to remember that as will other types of lettings the property needs to be certified as same and compliant with gas and fire safety regulations.
If your property is a leasehold rather than a freehold, which is the case for the vast majority of central London properties, then the likelihood is that short-term Airbnb style lettings will in one way or another bring you into conflict with your Landlord who will ultimately be able to forfeit your lease via the property tribunal if you do not cease the breach of lease or reach an amicable agreement. A breach of council regulations can also lead to criminal proceedings.
Before deciding what to do it is important to be fully aware of the risks involved so please do not hesitate to contact our leasehold department here at Judge Sykes Frixou for further advice.
Written by Christian Frixou