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Airbnb – breach of lease

It now seems clear that an Airbnb short let will be in breach of a typical long lease.

The first case to address this was Nemcova [2016] where the long lessee had covenanted not to use the flat ‘for any purpose whatsoever other than as a private residence’. The UT held that a visitor staying ‘for a matter of days and then leaving’ would be a breach of that user covenant.

We now have a county court decision by Jan Luba (a highly regarded expert), involving both a user covenant and an alienation covenant:

User: the covenant here was for the long lessee to use the flat for ‘the occupation of one family only’. While this did not require use as a ‘private residence’ the judge held that on a true interpretation of the whole lease, use as a private residence was required and a short-term Airbnb let would be a breach.

Alienation: the long lease contained the usual covenants not to part with possession, or share possession of the whole other than via an assignment or underlease (without L’s prior consent, not to be unreasonably withheld). It was argued that the Airbnb letting is merely a ‘licence’ and thus outside the scope of the alienation covenant. However, the judge dismissed that point – in his view, it did not matter whether it was a lease or a licence, and nor did it matter if the contract was made with the Airbnb portal. A typical alienation covenant will capture both unauthorised leases and unauthorised licences; Airbnb must be one or the other, and there must, of necessity, be a breach.

It now seems quite clear that Airbnb letting will almost certainly be in breach of a typical long lease. This assumes, of course, it is a letting merely for ‘a matter of days’. The position with longer lets is more open for argument.

For the sake of completeness we should mention that another lease covenant that may well be broken in these cases is ‘nuisance’. But, to succeed on that ground there must be clear evidence of nuisance caused to neighbours etc. In practice, therefore, it will usually be easier to rely upon breach of a user and/or alienation covenants if there is a letting of merely ‘a matter of days’. Finally, conveyancers should consider whether flat-buyers should be warned about the potential problems if they intend to make money from short-term Airbnb lets. See commentary on Bermondsey v Koumetto (1 May 2018, unreported, Central London County Court) noted in [2018] NLJ 18 May 13.

 

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