“Airbnb – Not Such Easy Money”

31
Oct

“Airbnb – Not Such Easy Money”



The concept of short term lettings via Airbnb has really taken off over recent months but ‘landlords’ must be aware of the pitfalls of such arrangements as well as the benefits.

Many landlords will hold their properties on a long leasehold basis.  If this is the case then prior to advertising any lettings via Airbnb they should check their lease to avoid potentially breaching the following covenants:

  • -  Underletting of whole or part of the property without consent of the Landlord;
  • -  Using the property for a purpose other than as a private residence in the occupation of a single family;
  • -  Using the property for business purposes;
  • -  Causing (or allowing) an annoyance or nuisance at the property; and
  • -  Vitiating any insurance policies at the property.

 Cases are being presented at the First Tier Tribunal (where the judgements are persuasive not binding) and the Upper Tribunal (whose judgements are binding) and they indicate that whilst short-term stays do not appear to breach underlettings provisions because the arrangements are more likely to be akin to licences than leases, the breaches of the other covenants are very real and such landlords would run the risk of losing their properties via forfeiture proceedings and/or suffering financially via a claim for damages. 

In addition there are statutory risks which affect landlords even if they hold their properties on a freehold basis.  Landlords need to hold gas safety certificates, install smoke and carbon monoxide alarms at the property and have energy performance certificates (EPCs) in place prior to such short term lettings.  Landlords in London must also be wary of the Deregulation Act 2015.  Section 44 would be breached if anyone pays to sleep in their property for fewer than 90 days per year unless the landlord has permission to use the property for temporary sleeping accommodation. 

Finally, landlords must consider whether or not Airbnb lettings would turn their property into a house in multiple occupation (HMO).  If more than two people who are not family members are sleeping in the property then HMOs could apply and a HMO licence would be required.

Article by Craig Mullen.  Craig is a Managing Associate at the firm.