Airbnb - An update
30th January 2020
30th January 2020
In May 2018 we provided you with information of the then two main cases that provided to Landlord clients a basis to prevent short term holiday lets (“Airbnb type lets”) see here. The position has changed little since the decisions in Nemcova v Fairfield Rents Limited  and Bermondsey Exchange Freeholders Limited v Ninos Koumetto , and these cases assist us greatly in bringing to an end the continuance of short term lettings of property affected by covenants similar to those relied upon in those cases.
It is fair to say that the phenomenon that has been the Airbnb/short term lettings experience continues to grow, and why not? The commercial benefit of letting on a short term basis over a long term letting is clear to see with significantly higher returns from the former.
We have seen not only a growth in the number of leaseholders and property owners utilising this income stream but also tenants taking Assured Shorthold Tenancies and then sub-letting the units through the likes of Airbnb. This latter scenario is often undertaken in circumstances where the property owner was initially unaware and had not consented to the sub-letting or nature of it. Ultimately though, it is the (unwitting) property owner who will bear the cost of the action taken by their landlord or management company to prevent the continued unlawful use by their tenant.
Recently things are changing, or, at least, they are said to be changing. You may already be aware that in Greater London (only) the use of a property for short term lettings for a cumulative period of more than 90 days a year amounts to a change of use for residential premises and thus requires planning permission - s.44 Deregulation Act 2015 amending s.25 The Greater London Council (General Powers) Act 1973 (“s.44 DA2015”). The value of this change is, however, somewhat muted as the local authorities desire to enforce this very clear and frequently breached provision appears to be hindered by budgetary limitations and what the authority will consider to be other and higher priority matters.
Airbnb say that they too are proactive in supporting the s.44 DA2015 restrictions by automatically limiting landlords taking bookings for more than 90 days in the absence of evidence that relevant planning permission has been obtained. We would be very interested to know how effective this “automatic” limitation is as certainly we can report a continuing increase in the number of unlawful short term lettings that we are dealing with in all areas, including the Greater London area.
A recent case in Scotland has highlighted what is apparently the concern of most local authorities in relation to the short term lettings issue. This was a planning case (Ref: ENA-230-2164-5/6 Castle Wynd South, Edinburgh) in which the key issue was the likely disturbance to other residents caused by the use of the flat as a short term letting unit. This was pinpointed as the level of arrivals and departures and the resulting increased traffic through communal parts of the building, particularly the stairways and landings. This was compared to what would be the case if the flat in question was occupied by a permanent occupying single family for the same period. The finding was that the use of the property as a short term let unit amounted to a material change of use from that of a residential dwelling and thus required a change in planning consent for the property if the short term letting use was to continue.
Whilst the Scottish decision is not binding on matters in England and Wales, it is said that other authorities (perhaps evidenced in part by the implementation of s.44 DA2015 referred to above) are taking a look at this issue from a planning perspective and focusing on the negative affects of short term lettings use. Outside of London the picture is less clear and certainly we are not aware of many cases where an authority in England or Wales has taken a particularly pro-active look at preventing this growth in what, in many cases, is an unlawful use of the properties.
A continuing problem
Given the lack of actual support from the planning authority side, despite the words above, it falls to the owners or managers of developments to ensure that properties in those developments are not being used other than as they should.
As explained above, we are seeing a significant increase in instructions across our client base (which covers most parts of England) where a property is being used in breach of the user covenants. That might be short term letting or unlawful use of another nature such as running a business. On the latter we currently have an influx of actions against various proprietors of home based creches and other businesses.
Many of those matters are resolved promptly and without recourse to proceedings. A few are disputed or otherwise result in formal action because the property occupier feels that if they ignore us we will go away - sadly for them we won’t, and we don’t!
If you are receiving complaints relating to the use of a property on a managed development, be that by the owner or perhaps their tenant, then despite the right sort of noises being made, as above, the reality is that relying upon the local authority to act is possibly not going to see a speedy, or any, resolution.
We are continually receiving new instructions to advise clients on whether a particular use of a property is unlawful and what they might be able to do to bring that issue to a conclusion. With the various matters already decided by the Courts, most cases can be concluded promptly and commonly with the defaulting owner paying the client’s costs.
This Legal Update describes the position in law as at the date of this article and care should be taken to note any subsequent amendments to the position as set out above. The Legal Update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.
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