This month, the search begins for rooms for friends and extended family, to enable them to stay close by over the Christmas holidays when there’s not enough room in your own home. Local hotels and B&Bs really benefit over the festive season but since Airbnb has emerged, it has taken its fair share of the market. However, its plans to grow even further may be scuppered – at least initially - after the latest court judgment which has ruled:
“People whose leases state that their properties may be used ‘as a private residence only’ cannot rent out homes in the short term.”
The ruling was made after the owner of a one bedroom flat fell out with her neighbours when they became concerned about the number of strangers regularly staying over and they subsequently asked the apartment block’s freeholder to take action.
The flat owner maintained that she had remained within her lease’s “private residence use” clause because she paid the flat’s council tax, bills and because she stayed there three or four days every week.
The owner also pointed out that her lease contained no obvious restriction on her charging people to stay in her flat short term while she wasn’t staying there.
But the judge disagreed.
The ‘private residence only’ clause allows a freeholder to have control over their property, for example if they didn’t want more than one family living together in a residential unit, or several students renting out a property together. But now, it will also act as a bar on Airbnb hosts renting out their properties on a short term basis, otherwise their freeholder has every right to take action and the local authority may issue an enforcement notice.
But it’s important to note that while the tribunal’s ruling does not affect people who rent out rooms while they too are staying in the property, it is likely to affect the thousands who rent out their leasehold properties in Bucks and Berks on services like Airbnb. This could be considered a huge blow for them when wanting to make some extra cash over Christmas and cause some concern that their property could be left empty over the holidays, if they plan to be elsewhere.
So what can you do?
Currently Londoners are legally allowed to rent out their properties for up to 90 non-consecutive nights, but this is not the case for residents in Bucks and Berks and it wouldn’t cover an extended Christmas stay in any case.
If you’re a leaseholder and you’re thinking about renting out your property on Airbnb this Christmas, check your lease, because if the freeholder decides to take action for breach of lease on that clause, the consequences could be extremely serious. You can face legal proceedings, be forced to pay legal costs and ultimately your lease may be forfeited.
It’s important that Airbnb hosts also check their mortgage terms which may have restrictions around renting at all. Moreover they could also be severely penalised if insurance premiums rise or voided, as a result of one of their Airbnb short term users damaging the property.
And all of this wouldn’t make for a great financial start to 2017.