Short term lets and private residences

Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC)

We’ve seen a First Tier Tribunal case on breach of lease by use of the property for short term lets through Airbnb. Here the Upper Tribunal weighs in on the significance of lease covenants for short term letting use.

The question was an  ostensibly simple one:

A long lease contains a covenant not to use the demised premises or permit them to be used for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence. If the leaseholder advertises on the internet the availability of the premises (a flat) for short term lettings and grants a series of such lettings, do the leaseholder’s actions breach the covenant?

It was not in contention that the lessee let out the flat for a night or two a time, mainly to business travellers, for about 90 days a year.

At the FTT, the lessee had argued that

It was necessary to construe the lease as a whole. He noted the lack of material restrictions on underletting or granting short term tenancies or licences, the lack of a positive requirement that the Lessee reside in the flat herself or occupy it as her principal home, and the lack of any covenant prohibiting business or commercial use or use of the flat for holidays. It followed, he contended, that provided that the flat was being used as a private residence by someone, the circumstances of their occupation were immaterial.

and

that the only meaning that can be ascribed to the words ‘private residence’ is whether the flat can physically be described as a private residence, namely whether it retains the physical characteristics of a private residence such as a kitchen, bathroom and living area, and he cited in support of this proposition the decision of the Court of Appeal in Jarvis Homes Ltd v Marshall [2004] 3 EGLR 81

The freeholder had relied upon Caradon District Council v Paton [2000] 3 EGLR 57; Tendler v Sproule [1947] 1 All ER 193; and Falgor Commercial SA v Alsabahia Inc [1986] 1 EGLR 41 in its argument that the use was not as a private residence.

The FTT had adopted Caradon in finding that use as a private dwelling house required the flat to be occupied as a home and that ‘private dwelling house’ and ‘private residence’ were interchangeable terms.

The Upper Tribunal distinguished Falgor and Tendler on the facts and contexts, and was reluctant to find that it was necessary to import the idea of use as a home for ‘private residence’ as per Caradon. The UT then went on to hold:

The clause does not state that the premises are to be used as the private residence of the lessee or the occupier, but as ‘a private residence’. The use of the indefinite article (‘a’) is significant. A person may have more than one residence as any one time- a permanent residence that he or she calls home, as well as other temporary residences which are used while he or she is away from home on business or on holiday. It is immaterial that the occupier may have another, more permanent residence elsewhere as there is no requirement that the occupier is using the property as his or her only (or main, or principal) residence. However, it is necessary, in my judgment, that there is a connection between the occupier and the residence such that the occupier would think of it as his or her residence albeit not without limit of time. In short, for the covenant to be observed, the occupier for the time being must be using it as his or her private residence.

And then, on whether short term lets could meet that description if use as a residence:

I have reached the view, consistent with the decision of the Ft T, that the duration of the occupier’s occupation is material. It does seem to me that in order for a property to be used as the occupier’s private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights in the week. In my judgment, I do not consider that where a person occupies for a matter of days and then leaves it can be said that during the period of occupation he or she is using the property as his or her private residence. The problem in such circumstances is that the occupation is transient, so transient that the occupier would not consider the property he or she is staying in as being his or her private residence even for the time being.

Having considered the context of the grant of the lease, and the nature of the intended relationship between lessor and lessee taking account of the obligations entered into, I am of the view that in granting very short term lettings (days and weeks rather than months) as the appellant has done necessarily breaches the covenant under consideration.

Appeal dismissed and finding of breach of lease upheld.

Comment

Unless the Court of Appeal deal with this issue at some stage, this is clear and binding authority that a lease covenant to only use a property as ‘a private residence’ is breached by short term, holiday, or Airbnb style letting. The clause would not prohibit longer sub-letting, for a tenancy say (though other lease clauses on sub-letting may be present).

This is a common, though not universal lease clause. Anyone doing Airbnb lettings in a leasehold flat should immediately check their lease covenants, because if the freeholder/head lessor decides to take action for a finding of breach of lease on that clause, this is a clear precedent that such a use would certainly be a breach.

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Housing law - All, Leasehold and shared ownership and tagged , , .

52 Comments

  1. We live in and own a flat directly above one which is rented through airbnb for rather more than 90 nights per year. We were up in arms when we first became aware of the very short term rentals, and complained to the local council. They replied that airbnb was an approved use in the area. Since then we’ve become accustomed to strangers coming and going quite often, and we believe that on balance they are probably quieter than having an ordinary family living beneath us. Our lease does prohibit business use, but our managing agent is of the opinion that we should fund any litigation ourselves — but that’s another matter.

    • The 90 days a year limit is London only.

      Business use is a separate issue to the ‘private residence’ clause – but has been found to encompass Airbnb use in some circumstances. It is only the freeholder/head lessor who could take action for breach of lease, but it is possible that you lease may require you to fund or part fund any action by the freeholder, if it is at your request. It depends on what is in the lease.

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  4. In our case, the freeholder owns 17 out of 61 flats under the identical leases that the remaining residents enjoy:
    “To use the as self contained private residential flats each in the occupation of one household only and for no other purpose whatsoever.” He advertises them as holiday lets via various sites and occupies none of them. Do leaseholders have the right to stop his doing this through the Tribunal?

    • Oh blimey. That is difficult. Depending on your lease, it is usually only the freeholder that can take action on breach of lease. Se if there is any clause in your lease stating that the freeholder will enforce lease covenants against other leaseholders at a leaseholder’s request (and probably expense). That might be of use but will still be very tricky.

      If you are in Greater London and he lets out for more than 90 days a year, you could shop him to the council planning enforcement team… But would need proof.

  5. So what was the penalty at the end of this? that they had to stop doing air bnb or was the lease forfeited or some other penalty?

    • If she didn’t stop, freeholder could forfeit. She would very likely have to pay the freeholder’s costs of the Tribunals too under a contractual lease provision.

  6. It is profoundly ironic, and I’m sure not the intention of the Tribunal, that if a leaseholder is in breach of his lease — big trouble,, but a freeholder who grants himself, or his family leases on apartments within a block, is immune from any action

    • The Tribunal was simply going on the meaning of lease covenant, not a broader policy or intention. I agree that the position is unfortunate where there is a freeholder who won’t enforce covenants and can’t be made to do so.

  7. Referring your your “oh blimey” when commenting on the impossibility of compelling a freeholder to enforce covenants on leases he has granted to either himself or family, what would be the situation if the Tribunal had appointed a receiver/manager while leaving th freeholder in place. Could those rights of enforcement be taken on by the receiver?

  8. We purchased a property on a buy to let basis, this was subject to becoming a member of the management association which looks after the grounds and premises overall.

    There was no specific prohibition in the lease which prevented him from letting the property as a holiday let.

    Does case law support the position that holiday lets do not offend covenants against carrying out a trade or business? If so, which?

    The management company state that holiday lets are now in contravention of the lease following a ruling in the Upper Tribunal (Lands Chamber) Nemcova v Fairfield Rents [2016] UKUT (LC) which concluded that granting short term lettings amounted to a breach of a covenant not to use the flat for any purpose other than that of a ‘private residence’ We relied on the sellers solicitors authority and their own interpretation of the lease which does not prohibit such activity. In view of the recent case law, can the management company restrict us from using the property as a holiday let by getting them to agree to a deed of variation? What are the options available? What possible sanctions would we face if we refuse to enter into the DOV? Kind regards

    • I don’t quite follow. Are you saying that the lease has a clause not to use other than as a private residence? If so, Nemcova means it can’t be used for short term letting. Whether the management company agrees to vary that clause is entirely up to them. You have no right to have it varied.

      The property could still be used for standard letting to tenants. A BTL mortgage may well have conditions that only standard ASTs are to be allowed.

    • Apologies, there is no clause in the lease which states that the property cannot be sublet or used as a holiday let, it appears that some of the residence have complained to the management agency about the amount of tenants that are using various premises on the site as holiday lets. This has led the agency to send out letters to all owners advising them that the holiday lets are now prohibited.

      My question is, can them impose conditions retrospectively? It appears to be an onerous action which will have great financial loss for the local community and the owners if successful.

    • They can’t impose conditions on use that are not a part of convenants on use in the lease. Whether your lease does contain any such covenants is the kind of advice we get paid for. But they certainly don’t have to be phrased to specifically say ‘no holiday lets’, there are plenty of other kinds of lease clause that would catch short term lets.

    • Thank you for your advice Giles, very helpful indeed.

      The main point of contention here is how a specific restrictive covenant will be interpreted; this depends on the precise wording of the Lease as a whole and will be construed by reference to the objective intentions of the parties at the time of the grant and any surrounding evidence or documentation.

      Thanks again

    • Yes. But if there is a clause where there is binding precedent on a clause’s interpretation and the circumstances are the same (ie a residential long lease in a residential block), then the interpretation is set. Nemcova is definitive on the meaning of private residence in those circumstances.

      You could also look at this decision – though a non-binding FTT decision – on the significance of other lease clauses, including on ‘business use’. http://decisions.lease-advice.org//app/uploads/decisions/actsect168/1-1000/676.pdf

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  10. I understand there are residential leases that exist with Subletting clauses stating the tenant does not have to gain the Landlord’s consent when underletting the property as a whole, irrespective of the commonly seen Permitted Use clause of ‘as a single private dwelling’.

    This summary article of Nemcova seems to effectively suggest Permitted Use overrules everything else, and holiday / short term rentals are in breach for residential leasehold apartments, or am I missing something?

    I am not aware how else a Permitted Use clause can be worded for a residential apartment, other than ‘as a private dwelling’? (or something interchangeable with that term).

    For those leaseholders out there who have a lease with nothing about a sub-let tenancy needing to be on an AST basis (for example) and no requirement to gain consent from the Freeholder (but with a Permitted Use clause of ‘private dwelling’), then is the Nemcova ruling relevant in understanding if carrying out holiday / short term rentals become a breach?

    • Hard to answer without a specific lease example. But in principle, I don’t see why a permitted use clause could not constrain a ‘permission to sub-let’ clause. Think of it this way – a restriction on use that said ‘not to be used as business premises’ would reasonably be taken to restrict sub-letting, would it not?

  11. Thanks for the reply Giles. Interesting discussion.

    For the large number of leases out there that have….

    1) Permitted Use clause of “to be used as a private dwelling”,
    2) Sub-Letting clause with no restrictions (ie “may underlet without Landlord’s consent”),
    3) No mention of use restrictions on the type/length of tenancy
    4) No mention of use restrictions re business premises

    … I struggle to see how such a combination / scenario (which I believe to be fairly standard in leases) would reserve the Landlord the right to prevent a leaseholder from renting out their property, whether that be for short term rentals or long term.

    Under the separate scenario that you mention, ie with a specific use restriction of “not to be used as business premises”, then this becomes an interesting one!
    Isn’t an apartment owner who is earning income from ‘traditional’ tenancies (of 6 months+) as much a business as one who is earning income from short term rentals?

    In my experience, the rental market (whether it be short term or long term) is in the significant majority of cases carried out on leases as per the above.

    If a Permitted Use clause of “private dwelling” can constrain the right of the leaseholder to rent out their property, then there would be no ‘Buy to Let’ market in residential leasehold apartments?

    • Sorry, business use may have been a red herring – was bay way of example. Letting out a property on ASTs would be residential use, not business. Letting out a property for non-residential use may arguably be business use – in previous FTT case, letting out as a short let for photo shoots, or parties was taken as business use.

      A ‘only use as private residence’ clause would certainly not prevent long lets (AST, or conceivably a company let if the purpose is for a residential occupier). The issue, as per Nemcova, is whether short lets count as ‘residence’, (or as ‘dwelling house’ in Southwark’s case). The Upper Tribunal said not.

      An unrestricted sub let clause will be subject to other lease clauses, of course. Otherwise you would be in the ridiculous position of being unable to stop a leaseholder letting the flat out for use as an office, or a dog grooming parlour, etc.. Obviously there may be planning issues there with change of use, but on your view, the lease itself wouldn’t allow the landlord to prevent it. I don’t think that is right.

  12. Agree with what you are saying about an otherwise ridiculous situation from being unable to stop a leaseholder letting the flat out as an office or dog parlour, as that would clearly be the leaseholder not using the flat for residential purposes.

    However, what is your view for a short term rental that is for example booked by a company as furnished accommodation whilst an employee is working in a nearby office (or a self employed contractor), or for a family visiting other family (as alternative to a hotel), etc etc?…. for a lease with…
    – a sub-let clause which is unrestricted (in terms of requiring consent)
    – no restrictions on length of type of tenancy
    – permitted use as a single private dwelling

    The above is in my experience one of the most common lease situations for a significant number of buy to let investors who are renting their leasehold properties on either a short term ‘tenancy/lease agreement’ or long let AST.

    • Long let AST is obviously fine.

      For anything else, it is a question of fact. Consider the reasoning around Airbnb style short lets in Nemcova
      https://nearlylegal.co.uk/2016/09/short-term-lets-private-residences/

      Is a company let of, say, a couple of months of the same type as a nightly, or several nights booking through Airbnb? Arguably not. Arguably the company let for an employee is use as ‘residence’ opr ‘dwelling’ in your example. Family visiting other family? Well, it would depend, wouldn’t it? How long for?

      It is a restriction on use, not a specific kind of tenancy. And use is always a question of fact.

  13. Family visiting other family whether it be for a long weekend or a fortnight, the property is still being used as a private dwelling is it not? A ‘home from home’ scenario. But certainly not a new residency.

    You rightly say it comes down to a question of fact, but interestingly in this scenario what is the fact being determined upon a short term rental being within permitted use?

    Yes, a long let AST is fine as it provides residency and therefore only a lease which has permitted use of “as a private residence’ would fit.
    A short term let does not provide residency – and this is the key differentiation from an AST

    If the permitted use clause is “as a private dwelling”, then the person staying short term is using it as a private dwelling are they not??
    And if the sub-letting clause has no restrictions in terms of landlord consent, then the leaseholder providing their apartment (for someone else to use for a short period) is still within the terms of such a lease, are they not?

    • No, a weekend is not enough to be ‘residing’ – that is the point of Nemcova. ‘Private residence’ clause has been determined by the Upper Tribunal. Use as ‘private dwellinghouse’ has not been so determined yet – that I know of – but I’d suspect would be similar. So the issue of fact is (simply!) whether the use of the property is as a residence, or a dwelling house.

      Look at it this way – someone stays the weekend in a hotel – is that use as a dwelling? Are they ‘residing’ there? I’d suggest obviously not.

      But, someone staying for a couple of months – as in your employee example – that would be much greyer. I’d think it at least arguable someone staying at the flat for a couple of months was residing, within the Nemcova approach. Still a short let, but factually different. You are hung up on the terms, short let or AST. Forget the terms, it is about use.

      We are, of course, skipping over the other issues – whether short let permitted under mortgage terms, whether it invalidates the building insurance and so on.

  14. Hmm… an example of a hotel feels entirely different… in that scenario we are clearly not seeng the Use being as “a single private dwelling”, and there is full provision of services such as front desk and restaurant, also talking about a room/suite rather than someone’s whole apartment being used.

    Going on the issue of Use and the test of Facts, a short term let in a property where the owner has a lease which specifically has a Permitted Use definition of “as a single private dwelling” (ie no mention of the term residence), then that to me results in the freeholder having no right to prevent a leaseholder renting on a short term let basis? (assuming no breach occurs within leaseholder obligations to other leaseholders/residents regarding nuisance etc)

    I do not see how a weekend stay versus a 2 month stay has any bearing on the Use? (when determining fact on single private dwelling use). For both types of stay it is being used as a home, ie a single private dwelling.

    The wording of a sub-let clause would then feel relevant and if for example it contained no restrictions on length or type of tenancy agreement then Freeholder’s attempting to prevent a short term let (for use as a home) would further seem unlikely to hold?

    • No, a weekend is most certainly not using it as a home. That is the entire point of Nemcova.

      The only question is whether there is a difference in meaning between your proposed clause ‘private dwelling’ and the Nemcova clause ‘Private Residence’. Does ‘dwelling’ have effectively yhe same meaning as ‘residence’. If it does, then you are stuffed on short lets of a night or few nights.

      As I keep saying, there is no court or tribunal decision on this term ‘dwelling’ or ‘dwelling house’ yet. But, as another example, a clause limiting use for ‘occupation as a single household’ resulted in an injunction being granted to the landlord prohibiting Airbnb lets by the leaseholder, despite subletting being permitted under the lease.

      I get the very strong feeling this is a particular lease of yours you are talking about, because the terms you set out are hardly general. If so, I’m afraid I am not going to agree that your lease gives permission for Airbnb or similar use. It will depend on the meaning of ‘dwelling’ and I would not want to put a bet on that being significantly different to ‘residence’.

  15. Personally I avoid leaseholds like the plague! One and only experience put me off for life, as Service Charges can just about be made up as you go along and leaseholders get such little protection!

    Reason for adding to this thread…
    I advise a number of clients who have turned their investment attention out of money markets and into the buy to let market, and so the obligations and restrictions in the lease is critical for them to be fully aware of. I am seeing a growing trend in these clients looking to further maximise returns by opting to furnish to a high standard and appoint management companies to oversee the check-in and changeovers for short term lets.
    By far the most common permitted use clauses amongst my clients’ leases are worded ‘dwelling’ rather than ‘residence’, and 50/50 on whether the sub-letting clause is unrestricted or stipulates the requirement for an AST.
    Your very useful article on Nemcova grabbed my attention, as the case was mentioned to me by a client’s conveyancer yet not something I was aware of.
    The more I read, it seems Nemcova has the potential to severely jeopardise short term lets and yet we all know the concept is here to stay and will survive.
    As you rightly point out, a lack of court or tribunal decision on ‘dwelling’ creates a grey area.

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  17. We’ve been having huge problems in our building from a group of people who have created a very lucrative business from renting out “luxury” flats on ASTs, pretending to be legitimate tenants (even creating a fake estate agent in one case), and then adding their flats to their booking.com and airbnb empire. They’ve managed to rent out several flats in our building through this scheme, and in the space of a year now have built a small empire, with a team of workers, a large office in Dentral London and several dodgy limited companies. The managing agent has been pursuing the leaseholders, but these guys seem to be hiding their mail to cover their tracks. They are also running dozens of other holiday lets round London. Booking.com is unreachable for complaints, airbnb doesn’t help at all. In one case, Airbnb suspended one flat after going over 90 days, and they just started another listing instead.

    It seems like the law in this country has to change to be more in line with New York, and ban multi listing, and go after the people running the holiday lets, rather then leaseholders, who are often in the dark about what’s going on in their flats.

    • Leaseholders should know what is going on in their flats! It is only the leaseholders that can terminate these tenancies (and if they are purportedly ASTs, that should be very easy – non-occupation as primary or principle residence by the tenant).

      This is not an issue that reliance on lease clauses alone is going to resolve, I agree. I suspect that there will be legislation but that it is quite some way off yet.

  18. Very helpful reading your discussions – thank you for sharing. Am I right to assume that as the freeholder of an ex-council property acquired through inheritance ( I have my own main residence elsewhere), the restrictive covenant of not ‘used for any other purpose than as a private dwelling house’ applies equally as in cases mentioned above? The fact of being the freeholder I would assume makes no difference. Also, I assume I can use it myself for our own family holidays?

    • We can’t give individual advice through the site. You should seek proper advice from a solicitor.

      It sounds likely, but you need advice on the freehold and the exact wording of the restrictive covenants.

  19. Giles – Hi
    The case of Nemcova is being used as a precedent to find lessees in breach of covenant when they let on Air B and B. However some leases don’t say ‘single private residence – they say ‘ a private residential flat’ I have heard a solicitor in an FTT case I went to, confuse this with a private residence. There is an LVT case which was won by the lessee CH1/ OOHE/LBC/2010/0007
    Maymyo Management Company Limited v Moira Hall. The lease refers to ‘resdential purposes as a single private residence’

    ‘Single’ the LVT said was ‘tautological’
    The LVT said Private was ‘tautological ‘
    Residential they said ” people can make a temporary home by treating their present accommodation as such”

    No breaches of covenant.

    Everything about this case contradicts the presently accepted wisdom from Nemcova – people should take a look at it before giving in and logging off their properly supervised Air B and B lettings which might present less disturbance to other lessees than a noisy young family.

    • Shula:

      Why not just turn the whole of London into a giant airbnb in that case? Who needs noisy young families with their noisy young children, cart them off somewhere else, let London have hotel room’s galore! Let all building insurance be void, and housing stock diminish. This kind of logic is utterly depressing, and completely avoids the reality of the situation – just take a look at the regulation they’ve had to put in place in New York and Amsterdam. London currently has the third highest number of Airbnb listings in the world. Things have to change.

    • Exactly – We’ve got at least 6 flats in our building running as holiday lets, several of them run by the same companies, many of which are sublets. It’s a regular occurrence heading off to work and finding a load of angry tourists trying to barge their way into the flats, they trash the common areas, leave the doors open at night, creating huge security problems.. One of the holiday lets has a “no parties, no one under 23 as a lead booker”, but has a review from a 21 year old complaining that that there weren’t enough wine glasses for her birthday party.

      We’ve been plagued for a year, the managing company don’t do anything but raise service charges to cover the damage and extra security call outs. There needs to be some proper regulation in place. The 90 day rule doesn’t work as they just sign up under a different name, and Airbnb made it worse by hiding dates of reviews. Airbnb and booking.com also don’t respond to complaints. New York authorities are now allowed to fine hosts up to $7,500 if they’re caught listing a holiday let, something similar needs to happen over here so hosts are liable and not leaseholders.

    • Shula

      Agreed that ‘private residential flat’ is not the same wording as ‘a private residence’. Also agreed breach falls to be determined on the actual clauses of the lease in all the relevant circumstances. But I don’t think it makes the difference you suggest.

      First, see Bermondsey Exchange Freeholders Limited v Kevin Geoghegan Conway here
      https://nearlylegal.co.uk/2017/04/short-term-lets-long-term-consequences/
      Breach of “Not to use or permit the use of the Demised Premises or any part thereof otherwise than as a residential flat with the occupation of one family only”. Decided just prior to Nemcova.

      Second, there is plenty of case law going back to the Rent Acts to the effect that a ‘residence’ does not require a property to be used as a home. And indeed that is what Nemcova also says.

      However, a ‘residential flat’ does have to be used for residential purposes, which can only be use as a residence – and that is where the decision in Nemcova has relevance, the issue being whether short lets of a few days or a week are use as a residence (they aren’t).

      This is not about whether it has to be a home or not – that was not even the issue in Nemcova. In Nemcova the issue was whether the use was as a residence. I am having serious trouble seeing how you would draw a distinction between use as a residence and residential use. Can you explain what the distinction is in your view?

      I can’t find CH1/OOHE/LBC/2010/0007 online. Do you have a link? Would be interesting to read.

  20. Shula – the link doesn’t work, cut short. Can you try again? Or email via the form below.

  21. The case Shula was referring to is here
    http://www.residential-property.judiciary.gov.uk/Files/2010/June/40004MV8.htm
    CHI/00HE/LBC/2010/0007

    The lease clause in that LVT case from 2010 was:

    “Use for residential purposes The Lessee must not use the flat for any purpose other than for residential purposes as a single private residence in the occupation of one family or household only and the garden as ancillary to the occupation of the flat.

    The flat was being used for holiday lets of a week or so. The relevant part of the LVT decision reads:

    In the context of this lease we consider that the use of the word “residential” means occupation for living purposes as opposed to, for instance, business purposes. Whether a person is living in a property for a short holiday or as a permanent home, we consider them both to be residential purposes. The fact that somebody may be living in the premises to enable enjoyment of a holiday does not change the fact that the occupation is residential. […]

    Single private residence: We regard the word “single” to be tautological i.e. that it relates to the premises being used only by one family or household as stated later in the clause. “Private” we consider again to be tautological inasmuch as it relates to one family or household. The word “residence”, according to the Oxford English Dictionary means “a person’s home; the fact of residing somewhere”. We do not consider this limits the person to their normal home: people can make a temporary home by treating their present living accommodation as such. We think this is borne out by the second part of the dictionary definition which reflects the actual living arrangements at a particular time.

    So the LVT defines both residence and residential effectively in the same way, as living in the premises. However, the UT in Nemcova directly overrules this LVT’s definition of ‘residence’, at least for holiday or short lets of a few days or a week or so. Given that this LVT makes no real distinction between ‘residential’ and ‘residence’, my view would be that this does not help anyone wanting to assert that ‘residential use’ is different to ‘use as a residence’, and in fact probably hinders making any such distinction.

    • Interestingly, and certainly more arguably, with regard to ‘no business use’, the same LVT found:

      We do not consider that use for holiday letting constitutes use as a business. It may be the subject of a business, but the business is run elsewhere. (As an example, if a flat were to be used by a landlord for longer term residential lettings, it could still not be said that those residential lettings constituted using the flat as a business rather than for residential purposes).

  22. Giles – Hello, and great thread.

    If a restriction is to be performed by a lessee, but the same has a (quarter) share in the freehold, and therefore a freeholder, does the restriction on the lessee still need to be observed and performed as a freeholder?

    That said, I am still not clear on whether a restrictive covenant stating….to be used for any purpose whatsoever other than as a private dwelling in the occupation of one family only nor for any trade or business use… actually prohibits the use of short term or holiday lets?

    It appears that the LVT are clear that they do not consider holiday letting constitutes use as a business, but rather for residential purposes. But can a family or person use the property as a private dwelling, for say one night or a week, similar to that of holiday or short term let?

    • Roles as freeholder and leaseholder are separate. As leaseholder, restrictions must be kept to, regardless of whether also a (part) freeholder.

      Such a clause would very likely prevent short let use, though I don’t know of a finding on those specific terms. Arguably not use as a dwelling, almost certainly not use by ‘one family only’. Can’t be definite, of course, as no findings, but a breach would certainly be arguable at least.

      A family staying one night a week on a regular basis would probably not be a breach – no requirement for continuous residence – but that is not the same as short let.

  23. Thank you for the reply. If the leaseholder enfranchised freehold and subsequently became freeholder, could a breach still occur, for example, could a leaseholder pursue the breach?

    Perhaps there is an argument that ‘one family only’ can let the ‘private dwelling’ at anyone time, for short or long periods, as this is does not constitute a business?

    Interesting thought.

    • No, only the freeholder can pursue the breach. It would still be a breach, but if the only freeholder is also the leaseholder, they aren;t going to pursue it. Of course, the other leaseholders could go for right to manage – which would include the right for manager to pursue breach of lease.

      Forget the business use – though that could be relevant for other uses, like letting out for a party, or photoshoot.

      The remaining question on the clause you suggested would be wether short-let use would be ‘as a dwelling’. There are arguments it wouldn’t be, but not clear cut.

      But anyone trying to do short lets to ‘a family’ only at a time is going to have a hard time patrolling that.

  24. Pingback: How to get a (much) better return on buy-to-let property – Landlord Blogger

  25. A follow up to this is whether a holiday flat let out/available for more than 140 days a year is liable for business council tax as it’s technically a small business? What if one owned several flats used as holiday lets? I asked my local council and they didn’t have a clue?

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