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Lease covenants and Air BnB style short-lets

Jonathan Riding | Brighton Solicitors

13th November 2017

There has been a noticeable increase recently in the number of managing agents, right to manage companies and freeholders seeking our advice on how best to deal with disruption caused by short-lets.  This is in no way a new problem, particularly in tourist areas or major towns and cities. However the inexorable rise of Air BnB, with no sign of slowing down, suggests this issue is one that is only going to become a greater challenge for those responsible for the management of blocks of flats.

The attraction of short-lets is obvious; with Air BnB suggesting a space for four people could produce a monthly income of around £2,700 in Brighton becoming closer to £5,000 in London (as at November 2017).   And if pursued as a serious business, the income can be significant.

A common issue for residential building managers is that short-lets can be disruptive, particularly if people are on holiday and spaces are occupied with a higher density (one bed flats with four people for example).  And it is the long-term building residents who pay the price (through disruption).  Residential spaces may simply not be suitable for short-lets.

Options for building managers

There will likely be a number of mechanisms within the leases that could assist.   Leases often contain restrictions on the sub-letting of part; which may help in the situation where rooms rather than the whole flat are being let out.  Otherwise there may be specific restrictions on the letting of the whole flat that can assist.  Specialist advice should be sought.

Most building owners/managers are now familiar with the 2016 Nemcova case, in which the Upper Tribunal (Lands Chamber) upheld a decision that very short-lets were in breach of a covenant not to use the premises for purposes other than as a private residence.   With the heavy caveat that covenants have to be construed in the context of the whole lease; again, underlying the need for specialist advice.  There may also be relevant restrictions on the type of tenancies and  duration.  As well as the more obvious anti-nuisance provisions.  Regulations (if applicable) can be powerful tools in the right circumstances.

It may also be possible to approach mortgage lenders (who may have specific restrictions against Air BnB style short-lets).  There could also be important building insurance considerations.

Griffith Smith Farrington Webb LLP advise managers of buildings of all sizes.  We are able to advise on all aspects of residential leases; with  Dan Ongley heading up the non-contentious team and  Jonathan Riding the contentious side.  We act for landlords and managing agents of all sizes, both in Brighton, the wider South East and London.

Author: Jonathan Riding, Commercial Team

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