14/03/2020

Short lets and breach of lease

A couple of First Tier Tribunal decisions to add to the growing pile of findings that short let use is in breach of lease.

City of Westminster v Madhukar Kothari LON/00BK/LBC/2019/0087

Mr Kothari had a right to buy lease of a City of Westminster flat. The lease contained a covenant by the lessee not to use the property:

for any trade profession or business whatsoever but to keep and use the Demised premises as a single private flat for residential purposes only.

Westminster identified that the flat was being advertised on Airbnb, with a number of reviews, following a complaint from another leaseholder. Mr K failed to respond to any warning letters or a letter before action. Mr K failed to attend the Tribunal hearing.

The Tribunal was satisfied that there was short let use, (indeed the Tribunal members found the flat listed on Booking.com themselves), and found:

It is compellingly clear from the documentary evidence produced by the Applicants that the premises have been used for short term holiday lets via both Booking. Com and AirBnB. This constitutes the use of the premises as a business in breach of Clause 18 of the Seventh Schedule. Furthermore this sort of short term letting runs contrary to the requirement in Clause 18 that the occupier uses the premises as a single private flat for residential purposes only (see Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC).

 

Bevan House Management Company Ltd v Denis Becker LON/00AC/LBC/2019/0010

Mr Becker was the leaseholder of a flat of which Bevan House was the freeholder. The lease contained a covenant not to do anything that would cause a nuisance, void the insurance or increase the insurance premium, and that:

“… Neither the Demised Premises nor any part thereof shall be used for any illegal or immoral purpose nor shall any trade or business be carried on there nor shall any boarder or lodger be taken but the Lessee shall use the Demised Premises for the purpose of a private residence only.”

Mr Becker claimed to have sublet the flat (subletting being permitted by the lease) since 2007, and that any breaches were by the sub-tenant not him. He admitted that the current sub-tenant did short let the flat while away for three months of the year.

The breach being by the sub-tenant did not get him very far, as per:

Borthwick-Norton and Others-v- Romney Warwick Estate Ltd (1950) 1 All ER, in which the Judge decided that a breach of covenant could be committed notwithstanding the leaseholder had not directly caused the breach. The head note stated-: “The judge held that the law would impute knowledge to them as they had received sufficient warning of what was going on at the premises, but had wilfully shut their eyes to the true state of affairs.”

On that basis, the Tribunal found breaches of lease:

The Tribunal considered the Advert on Air BnB, which contained the dates when the flat was available for letting for February and March 2019, and which also contained a number of reviews, it was clear from this that the flat had been let to a number of different individuals. There were 7 reviews between August 2018 and January 2019 and 15 in total.

The Tribunal finds that this was in breach of the sub clause of the lease which required the Respondent or his sub tenant to use the premises as a private residence only.

The Tribunal makes no finding that the premises were used for “… any trade or business”.

In respect of clause 12, the Tribunal accept that the letting of the premises via Air BnB had the potential to affect the insurance and on the basis of the statement of case, the Tribunal accepts that the insurance premium was affected.

Accordingly the letting of the premises was in breach of clause 22, in part, which states-: “or whereby any insurance for the time being affected on the Estate or any part thereof may be rendered void or voidable or whereby the rate of premium may be increased.”

Comment

Any variation on ‘private residence’ or ‘residential purposes only’ now seems enough to establish short let use as a breach. It is interesting that in both these cases, the Tribunal also found short let use amounted to carrying on a trade or business at the property. The wide problem of short let use also voiding insurance or increasing the premium is also being taken seriously.

 

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.

4 Comments

  1. Nick Parkin

    So what happened about the breaches?

    Reply
    • Giles Peaker

      The FTT can only determine whether there is a breach. It is then up to the freeholder whether to pursue forfeiture via a s.146 notice. In the second case, it looked like the breaches had stopped. The first case has only just been determined.

      Reply
  2. ali hussain

    Why did they go to the tribunal if they can go after forfeiture if the property was being used for air bnb and therefore a short term let and breaching the lease. As you have mentioned, plenty of other earlier cases had already confirmed this so what was the need for them to go to the tribunal. Also, would there be any point in going to a tribunal and getting this decision but then not going for forfeiture is it unlikely that they would get forfeiture in these types of situations.

    Reply
    • Giles Peaker

      Because you cannot forfeit without a determination of breach by a court or tribunal – that is necessary to serve a s.146 notice.

      Reply

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