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Long leases – Short Term Lets and the Meaning of “Private Residence”

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Long leases – Short Term Lets and the Meaning of “Private Residence”

Long leases – Short Term Lets and the Meaning of “Private Residence”

A ruling by the Upper Tribunal could see companies such as Airbnb and OwnersDirect take a hit in terms of the number and type of properties they are able to offer to holidaymakers.

In Nemcova v Fairfield Rents Limited [2016] UKUT 303 (LC), a leaseholder owning a flat in Enfield let out her property via Airbnb on a short term basis to holiday makers. Her neighbours became concerned about strangers staying at the property and asked the freeholder to take action.

Nemcova’s lease entitled her to use the flat as a private residence only (a typical clause in long leases). Nemcova said that she stayed in the flat for three or four days a week on average and the flat was let out for about 90 days a year. Nemcova argued that her lease did not stop people staying there while she was away.

The judge on appeal said “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”. The starting point in construing the particular covenant was “the ordinary and natural meaning of the words, read together with the whole of the Lease, having regard to the factual context surrounding entry into the lease in so far as this can be identified”. In considering the meaning of “private residence”, the judge said that this required the flat to be occupied as a “home” and that those occupying the flat were not doing so as their home.

As well as encouraging leaseholders to take a second look at their lease covenants before letting out their properties, this case is also likely to alert many neighbouring occupants to this additional course of action should they be affected by a similar situation.

For more information, contact our Dispute Resolution team on 0345 070 6000.