AirBnB - Are you Breaching your Lease?

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Article

30 March, 2020

Long, long ago, our ancestors used to be able to do something that was known as 'Going on Holiday'.

Historians now believe that this was a custom practiced by many, and involved crossing borders and staying in accommodation that was different from your usual home. These accommodations could be found on a website known as AirBnB.

As hard as it is to remember in a time of global pandemic, in weeks gone by AirBnb was the hot topic for many a landlord and housing lawyer. Perhaps the thinnest of silver linings to come out of the recent interruption to normal service is that it gives Landlords an opportunity to review their sub-letting policies in light of a number of recent cases surrounding the tourism behemoth.

The Issue

The issue posed by the short-term letting sight will be familiar to many; until recently the accessibility and convenience of the site made it easier than ever to make a bit of cash by letting out all or part of a residential property. However, in doing so the tenant risked breaching their lease restrictions.

Legal Updates

Two recent cases from early 2020 have explicitly tackled some of the issues posed by AirBnB and similar sites, and it will be a relief to landlords to know that they forcefully slam shut potential loopholes that tenants have sought to exploit.

In City of Westminster v Madhakar Kothari, a tenant was subject to a requirement to use their premises as 'a single private flat for residential purposes only'. After being presented with evidence that the property was listed online (in this case on both AirBnB and Booking.com), the Tribunal was more than satisfied that this was a breach of that clause. As Mr Kothari was making money from the site, the Tribunal were happy to rule that the property was no longer being used for exclusively residential purposes.

An additional, and perhaps even stronger precedent has come from Bevan House Management Company v Denis Becker. In this case, Mr Becker was actually permitted to sublet the flat, but like Mr Kothari was restricted to using the premises as 'for the purpose of a private residence only'.

Upon hearing that the property in this case had been advertised on AirBnB and had been sublet on a short term let on at least seven occasions, the Tribunal found that this was a breach of the restriction on using the Property for private residence only.

In a further helpful addition to their judgment, the Tribunal were satisfied that on the facts of this case there had been a second breach of the tenancy by Mr Becker, one which prevented him from doing anything with the premises that would cause the landlord's insurance to be 'rendered void or voidable or whereby the rate of premium may be increased'. AirBnB, the Tribunal found, would almost certainly have the potential to do this, and thus found Mr Becker to be in further breach of his tenancy.

Forbes Comment

It is an inconvenient truth that the law and the legal system often finds that it cannot keep pace with technology, and that the internet is very much a 'Legal Wild West'; introducing new problems that the law has been slow to overcome. It is reassuring, then, that with these new cases the law would appear to finally be keeping pace with this one issue at least.

These cases have added to an already existing body of caselaw to reinforce what many already suspected; that in the vast majority of cases a tenant setting up an AirBnB or similar account to sublet their dwelling on a short term let basis will likely find themselves in breach of their lease.

With these new cases, the Courts continue to show their willingness to take any reference to 'residential purpose' or 'private residence' as forbidding listings on AirBnB, and thus will most often side with the landlord in such cases. Additionally, on the issue of AirBnB having the potential to raise insurance premiums, landlords have been presented with a new front on which to confront illegal subletting.

For more information contact Emily Jordan in our Housing & Regeneration department via email or phone on 01257 240850. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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