Have a question?
033 3772 0409

Civil Litigation Solicitors

Britain^s top property court rule that a leasehold flat owner was breaking the law by renting out her property on Airbnb (4 November 2016)

Date: 04/11/2016
Duncan Lewis, Civil Litigation Solicitors, Britain^s top property court rule that a leasehold flat owner was breaking the law by renting out her property on Airbnb

We are all familiar with Airbnb. For those not familiar with it, Airbnb is in its simplest form, a peer to peer hosting site that enables a home owner called the host, to rent out his or her home to a guest on a short-term basis. Airbnb and other similar sites have led to the emergence of homeowners seeking to cash in on renting out their homes on a short-term basis.

The company has captured public attention this week as Mayor Sadiq Khan has said he "supports the right of people to benefit from renting out their homes for short periods" - but this "must be balanced against the need to ensure that Londoners are not adversely affected".

In a letter Mr Khan has written to MPs about "concerns" that the short-term rental service is reducing the availability of long-term rentals he mayor says that a change in the law may be required.

Mr Khan writes: "If boroughs are finding that the legislation needs to be revisited to make sure that we find a better way of balancing the benefits of the sharing economy with the protection of local residents and the retention of housing for long-term use, then I will be happy to work with them and discuss with Government whether any changes may be needed."

Whilst Airbnb policies put the onus on the homeowner to ensure that they comply with their legal obligations, it is unlikely that a number of homeowners on hosting sites would have double checked their lease if it’s a leasehold property or notified their lender if the property was subject to a mortgage. The consequences of not doing so can be devastating and such was the issue that the Upper Tribunal had to decide in the recent case of Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC).

Ms Nemcova was a long leaseholder of a residential flat and the freeholder was Fairfield Rents Limited. Ms Nemcova rented out the flat on a short-term basis using hosting platforms such as Airbnb. It appears that consent was never sought from the freeholder, which on the face of it may not have been granted based on the usage covenant in the lease.

In any event, the freeholder became aware that Ms Nemcova was renting out the property on a short-term basis to Airbnb guests and therefore issued an application under s.168(4) of the Commonhold and Leasehold Reform Act 2002, for a determination of breach of covenant before the First-tier Tribunal (‘the FTT’). It is important to stress that seeking a determination in the FTT is a prerequisite for serving a notice to forfeit the lease. On the evidence, there was no dispute that the flat had been let out by Ms Nemcova on a short term basis to Airbnb guests. It was also evident that she advertised the property on other similar hosting sites such as Holidaylettings, Trip Advisor and had set up her own website where the property was advertised.

In her defence, Ms Nemcova stated that most of the short-term lettings were to business users and not holiday guests. Furthermore, it was her case that the property has always remained her main residence and she paid all rates and bills in respect of the property and it remained her main residence.

Was her defence accepted?

The short answer is no. The FTT determined the application in favour of the freeholder but gave Ms Nemcova permission to appeal the Upper Tribunal (The Upper Tribunal is a superior court of record, giving it equivalent status to the High Court and meaning that it can both set precedents and can enforce its decisions (and those of the First-tier Tribunal) without the need to ask the High Court or the Court of Session to intervene).

In the Upper Tribunal, His Honour Judge Stuart Bridge in dismissing Ms Nemcova’s appeal held that the FTT did not err in law.

Practical implications for freeholders and leaseholders:

As a freeholder, it is important to be aware of the proliferation of leaseholders using Airbnb or other similar sites to host their properties. A starting point when a freeholder is aware of a leaseholder using their property on such hosting sites will be to consult the lease to ensure that there is no breach of covenant in relation to usage. If there is such a breach, practical steps should be taken to either get the leaseholder to admit the breach or issue an application in the FTT for a determination, the cost of a successful application will likely be payable by the leaseholder under the terms of the lease.

As a leaseholder, it is important to look at your lease carefully before venturing into the world of Airbnb hosting. As the saying goes, a stich in time saves nine.

Practical implications for hosting companies:

It is important to ensure your terms and conditions are up to date and specifically that the onus is on the homeowner to ensure that the necessary consent has been obtained before the property is placed on your hosting site.

Author Anthony Okumah is a Director and Head of the Duncan Lewis Civil Litigation and Dispute Resolution Department. He specialises in dispute resolution (litigation, arbitration or mediation), professional negligence claims predominantly against solicitors, debt recovery; insolvency; contractual disputes, leasehold disputes and contentious probate cases. Anthony also has an in-depth experience of boundary and neighbourhood dispute cases and additionally he regularly conducts his own advocacy in both the County Court and the High Court which allows him to represent his clients throughout their retainer.

Duncan Lewis is one of the leading solicitors in England and Wales offering expert litigation and alternative dispute resolution services. Duncan Lewis has acknowledged expertise in advising corporate clients on litigation matters – as well as advising private individuals in cases where litigation might be an option. If you require further assistance on this subject or any other property related litigation matter, please contact our litigation team on 03337720409.


For all Civil Litigation related matter contact us now.Contact Us

Call us now on 033 3772 0409 or click here to send online enquiry.
Offices Outside London
Duncan Lewis is the trading name of Duncan Lewis (Solicitors) Limited. Registered Office is Spencer House, 29 Grove Hill Road, Harrow, HA1 3BN. Company Reg. No. 3718422. VAT Reg. No. 718729013. A list of the company's Directors is displayed at the registered offices address. Authorised and Regulated by the Solicitors Regulation Authority . Offices all across London and in major cities in the UK. ©Duncan Lewis >>Legal Disclaimer, Copyright & Privacy Policy. Duncan Lewis do not accept service by email.