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FLAT OWNERS BEWARE!

27th September 2016

A recent Upper Tribunal decision which has looked at the interpretation of a lease covenant prohibiting the use of a flat for any purposes whatsoever other than as a private residence has potentially significant implications for flat owners looking to offer short-term lets.

The facts

The flat owner decided to advertise and let her one-bedroom flat on a short term basis principally to business visitors working in London. She set up a website advertising her home as an alternative to hotels and whilst she continued to live in her flat, let it out periodically.

The flat lease contained a covenant not to use the flat or permit it to be used for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence. The freeholder sought a determination that the flat owner was in breach of this covenant.

The decision

The Upper Tribunal affirmed the decision of the First-Tier Tribunal that the short-term lettings granted by the flat owner breached the lease provisions. It decided that for the covenant to be observed, the occupier for the time being must be using the flat as his or her private residence. This involved a degree of permanence, requiring occupation for a period longer than a weekend or a few nights. The transient nature of the short term lets meant that the occupant could not be considered to be using the flat as his or her private residence.

Impact

Whilst the case turned on its particular facts, the decision is a stark reminder that flat owners should be wary of advertising their properties for short-term lets. The advent of Airbnb and other short-term letting websites has resulted in more property owners looking to offer their homes as alternatives to hotels. Flat owners should check their lease terms to ensure that their letting arrangements do not fall foul of those provisions.

By Nick Martyn, Partner in the Dispute Resolution department.

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