Jonathan Dinsdale and Victoria Furlong, in law firm Blandy & Blandy’s Dispute Resolution team, explain the considerations when listing a leasehold property on Airbnb.
The past few years have seen the astronomic rise of Airbnb, which allows owners to rent out their properties for short-term lets of up to 90 days. It has proven to be a lucrative endeavour for many, and on first consideration seems like a relatively simple way to start a business.
However, there are several things to consider before taking the well-lit photographs from the best decorated angles of the property, and allowing guests to turn up at the door. Especially for those who own the long lease to their property.
Terms of the lease
Whilst the leaseholder may not consider the use of the property as a holiday home listed on Airbnb to amount to a “sublet”, which is often prohibited without permission in most lease agreements, it does not necessarily follow that they will be able to list the property on Airbnb. The case of Bermondsey Exchange Freeholders Ltd v Conway found that a term preventing the underletting of the property without permission, also applied to operating as a holiday let through Airbnb.
The change of use of the property is also a term that should be investigated in the lease, as was a consideration in the case of Nemcova v Fairfield Rents Ltd. The lease in Nemcova stated that the leaseholder was “not to use the premises or permit them to be used for any illegal or immoral purpose or for any other purpose whatsoever otherwise than as private residence.” The use of the property for the purpose of holiday letting through Airbnb was considered to breach this term of the lease.
The activities of any Airbnb guests may also be considered a breach in the lease, such as causing unsociable levels of noise and disturbing the neighbours, or through their bringing pets to the property.
Other considerations
In addition to breaching the lease, using the property for these purposes may cause the following issues:
Insurance
Holiday lets often need a specific type of insurance that covers the freeholder of the property. Should this not be in place, they could be found liable for numerous issues, such as health and safety matters. It may also be the case that any existing insurance may be invalidated by using the property in this manner, which could have implications for the freeholder of the property also, and should be considered prior to making the decision to list the property on Airbnb.
Planning
If the property is found to be bound by conditions that prohibit the use of the building for holiday lets, or for commercial purposes, local authorities can serve enforcement notices on a property owner who has breached planning law. Further, the local authority could determine that listing the property on Airbnb as a full-time holiday home changes the use of the previously residential building without planning permission. An enforcement notice could be issued in cases such as these, which have the authority to order a fine to be paid, and that steps must be taken to rectify the situation. This can amount to a very costly process. It is important, therefore, to check with your local authority if any exemptions apply that may allow the use of the property as a holiday home, or to check the Registered Title of the property, and any restrictions that may be listed pertaining to the use of the property as a holiday let, or using the property for commercial means.
Mortgagee
If you own the property as a leaseholder and have entered into a mortgage agreement, this must also be considered before listing the property on Airbnb. Changing the use of the property may constitute a breach of the mortgage agreement, and the Mortgagee may alter the interest rates as a result of this.
It is therefore advisable to seek professional advice prior to listing the property on AirBnB and accommodating holiday guests.
For further information or legal advice, please visit www.blandy.co.uk.
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