RTB and Airbnb in Southwark

Yes, the backlog of case reports is growing, but I’ve only time for a quick note on an interesting development in Southwark.

According to this report, Southwark council have decided that their Right To Buy leases contain covenants that would prevent short term letting of the whole property, and are to write to their leaseholders to tell them this.

The covenants that Southwark are apparently relying on are

“not to use or suffer the flat to be used for any purpose other than as a private dwellinghouse” and

“not to do or permit or suffer to be done any act or thing which may be or become a nuisance or annoyance to the council or to the Lessees owners or occupiers of adjoining or neighbouring property”.

The nuisance clause is straightforward enough, so long as nuisance or annoyance has indeed been caused. That is a matter of evidence and though nuisance and annoyance to neighbours may indeed very well result from short term letting use, it is not an inevitable result.

So, the general prohibition on short lets relies on the ‘private dwellinghouse’ restriction.

As we have seen in Nemcova, the Upper Tribunal found that ‘not to use other than as a private residence’ was not compatible with short lets, as that was not used as a ‘residence’. The question then will be whether ‘dwellinghouse’ and ‘residence’ have the same, or similar enough, meanings for short lets to be a breach.

This is the kind of question that makes Landlord and Tenant lawyers so popular at parties. For what it is worth, I think it is likely that ‘dwellinghouse’ will have the same effect as ‘residence’. That said, there is a complicated case history (too complicated for this evening) that means the two may not be synonymous. But then again, there may not be a relevant difference in the ways that they are not synonymous. If this gets in front of a court or tribunal, someone is going to have fun*.

Of course, for the leaseholder, this may well turn out to be expensive and unsuccessful fun. The combination of pressure on the 90 days use per year planning permission limit and Southwark threatening breach of lease proceedings should make any Southwark RTB leaseholder – or those looking to buy one with a view to Airbnb/short let use – think twice about letting out the whole flat on short lets.

I would anticipate that other Councils will also be looking at their RTB lease clauses in relation to short let use. And if not, why not?

(*fun strictly in the L&T lawyer sense of the word.)

Update 29/03/2017

As has been pointed out to me, Housing Act 1985 Schedule 6, section 17(1) throws the cat amongst the pigeons.

A provision of the lease, or of an agreement collateral to it, is void in so far as it purports to prohibit or restrict the assignment of the lease or the subletting, wholly or in part, of the dwelling-house.

Hmmm. On the one hand, the clause would seem to restrict a particular use, not subletting per se. ON the other hand, if short-lets of the whole are a form of sublet, can the clause be read so as to restrict them without falling foul of Sch 6 s.17(1)? Still more fun to be had…

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 , .

13 Comments

  1. I suspect that many Local Authorities adapted clauses from their standard terms of tenancy into their leases for RTB sales – the terms quoted in the article look very much like that. So what applies in Southwark may well hold good elsewhere.

    • Not quite what happened, no, but there does seem to be a broad correlation of RTB lease terms. That said, some allow charging leaseholders for improvements, others don’t – just repairs – so nothing standard.

  2. Something is not clear here, so please enlighten me. When we say RTB leases, are these for those still within the first 5 year period of the lease or across the board?

  3. I think I should clarify my original comment.

    Local Authority terms of tenancy generally contain clauses concerning the behaviour of tenants. Matters covered may include ‘no nuisance to neighbours,’ ‘residential use only,’ and perhaps ‘no dogs in flats.’ This material, suitably adapted, may well be adapted for inclusion in leases. It could be said that such clauses put lessees under similar behaviour obligations as tenants. Lessees’ obligations concerning service charges are something else.

    • But subletting and assignment clauses (or lack of them) are very different to tenancies. And the number of ‘behaviour’ clauses are negligible compared to a secure tenancy agreement. Nuisance clause are common in all residential leases, as are clauses like ‘only use as a private residence’ or ‘as a family home’. I don’t think RTB leases have anything much out of the ordinary, or that would stand out as imported from a secure tenancy.

  4. You’ve mentioned Sch 6 and the voiding of letting restrictions in an RTB lease. I think that’s one of the main reasons that BTLs have moved into RTB housing – RTB properties have advantages that others don’t.

    Sch 6 Para 6a also says that; “A provision of the conveyance or lease is void in so far as it purports to enable the landlord to charge the tenant a sum for or in connection with the giving of a consent or approval”. So, those nasty administration charges can’t be in such a lease either.

    Lots of local authorities are still charging for consents (mainly in London, but there are a few others elsewhere up and down the country doing the same). They seem to be relying on CLARA 2002 as a means to do so, That Act came into force and everyone adopted policies to accomodate it, but the Regulations came along some time after; the Administration Charges (Summary of Rights and Obligations) (England) Regulations 2007 Section 2, paragraph (3) states;

    “Any provision contained in a grant of a lease under the right to buy under the Housing Act 1985, which claims to allow the landlord to charge a sum for consent or approval, is void”. Which really just underlines the HA 1985.

    The deeming provisions of S19 (1 & 2) of the LTA 1927 come up against the voiding provisions of HA1985?

    It’s interesting that as at Sept 2019 Southwark’s website says “Southwark council does not give approval for short term lets and may take legal action against you”. They’ve been saying they’ll take action for quite a while now but no case has shown itself.

    • There have been various things behind the scenes with Southwark, I gather, but no cases that I know of.

      I didn’t know that about LAs charging admin fees. What are they relying on? CLARA Schedule 11?

  5. You’re correct – Schedule 11. Surprisingly enough the LAS says it agrees with those that are charging as they can “rely” on CLARA to introduce a charge. That advice must be spreading as Oxford City brought these charges into effect for consents for all existing/new RTB leases from 2017/18 – having charged nothing previously.

    I really don’t think the LAS, or LAs, have read the 2007 regulations as the provision to void consent charges must actually mean something, or it’s there to fill up an otherwise empty space. But Schedule 11 is badly worded. “Payable” can be read as an indirect consequence, or by virtue of something else. It should have been made clearer that it was not meant to mean that.

    But the LAS should know better. The FTT has again said that before looking at Schedule 11, you have to look at the lease. (Mr Mark Steele v Homeground Management Limited as agent for Abacus Land 4 Ltd
    MAN/00BN/LAC/2015/0006 8 October 2015)

    23. The sums demanded clearly fall within the definition of an
    Administration charge contained in sub-paragraphs (c) and (d) of
    paragraph 1 of Schedule 11 to the 2002 Act. The Respondent’s solicitor
    has suggested that if a charge falls within one or more of subparagraphs
    (a) to (d) the charge is recoverable. However, this argument
    is untenable. The charge must also be payable in accordance with the
    terms of the lease or permitted by some other statute. Only if this
    logically prior question can be answered in the affirmative will the issue
    of whether the regime in Schedule 11 applies arise.

    If consent charges shouldn’t be in an RTB lease then they aren’t payable

    What happens is that X council says we need a policy on this. What have the other councils done? Oh, they did that? They then studiously avoid re-inventing the wheel by copying it. That means accuracy AND errors are compounded. That’s why London LAs charge, they copy each other’s work!

    And, as one report on charges to one Council said (I’m paraphrasing) “we can charge for this, as well as this amount, as no one has said we can’t”.

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