Asked To Stop Airbnb in A Leasehold Flat

[Kirti4]

Hi Everyone! 

We have just been shocked and utterly dissappointed to find an email by our management company asking everyone in the building to immediately stop running Airbnb and close their listings as it is in breach of the Leaseholder agreement. We were just hoping to see if anyone else has faced this issue and for some support as to how best to deal with this. I believe this is a UK wide phenomenon and it is really sad to see these Freeholders ruining well run Airbnb, in addition to diminshing the appeal and value of the building as a whole. And all this for no apparent gain on their part, apart from the threat of them taking over the possesion of the apartment without cost if the short term letting continued.

We believe Airbnb and its community should stand up to this as apartments make up a significant proportion of Airbnb lets in the UK, and with most apartments I know (to the best of my knowledge) have clauses dissallowing short term lets, it would only be a matter of time before Airbnb shuts down in the UK!

[Gerry-And-Rashid0]

@Kirti4 

It;s not clear from your post: do you mean you rent the entire flat out for short periods of time? Or do you rent a room in your flat while you are still there?

Long before AirBnB most leases did not allow short term letting of the entire property. It's nothing new. If you are breaking this clause then they can take action.

is 

If it's the latter, ie renting a room via AirBnB, while you still live there at the same time, then the picture is a bit murky. There was one ruling in the UK that went against leaseholders and defined this activity, in effect as a business. So it will depend on how the lease is worded...see below for an overview of the judgement

One such example is the recent case of Nemcova v Fairfield Rents Ltd UKUT 303 (LC). The lease in this case stated that the leaseholder was “not to use the premises or permit them to be used for any illegal or immoral purpose or for any other purpose whatsoever otherwise than as private residence.” The Upper Tribunal decided that the clause prohibits all other uses save as a private residence. The clause did not state that the premises are to be used as the private residence of the lessee or the occupier, but as “a private residence”. In other words the clause in the lease would not be breached if the occupier for the time being is using it as his or her private residence. The motive for the occupation and the acceptance of payment is immaterial. What is important is the duration of the letting. Judge Stuart Bridge held that “…for the property to be used as the occupier’s private residence there must be a degree of permanence going beyond being there for a weekend of a few nights in the week.” The lessee in granting short term lettings for days and weeks rather than months had breached the clause in the lease to use the property as a private residence only.

[Kirti4]

Hi Guys

Many thanks for getting back. We let the whole flat out unfortunately. I just do not understand how it affects the Freeholders in any way as we pay the yearly ground rent and have taken extra trouble to assure no/minimal disruption to other residents. Is there any way out of this in your experience? Would regenotiating a lease (despite sounding impossible) be something you advice?

[Gordon0]

@Kirti4 - Everybody in the building would have to sign up to a new lease. Expensive, and fraught with headaches.

There are markets (New York jumps to mind) where management companies (and indeed neighbours) have become increasingly hostile to Airbnb type setups on the basis that a) it reduces affordable accom for 'locals' and, more likely, b) they don't like 'strangers' dragging their suitcases in/out of buildings.

The upside, at least where you are, is Manchester has a flourishing rental market. I've had a place oppostite Piccadilly for years and it has had about ten empty days in as long as I can remember.   

[Gordon0]

@Kirti4, like @Gerry-And-Rashid0 said, this is nothing new and, as you let your whole apartment, it's not a good prognosis. When you exchanged contracts/completed on the purchase, it would have been as per the terms and agreement of the lease. This has you, to put it simply, in a fragile position.

I haven't come across too many landlord/leaseholder spats of this type where the leasholder has 'won'. If there are loads of you in the same building who agree Airbnb is a 'good thing' you might be able to apply some muscle, but even that is unlikely. 

Good luck all the same. 

   

[Helen3]

Sorry @Kirti4

If it says on your lease that you cannot do STRs, why would you be shocked when they enforced the clause?

I can see why a freeholder wouldn't allow this as STRs can be disruptive to tenants living in apartment buildings.

Just because you want to run a business from your flat it doesn't mean they have to allow it.

You should have checked your lease.

If you want to run an Airbnb business look for a freehold property or a leasehold that allows STRs.

[Kirti4]

Thank You Gordon and Helen for your comments and advice! Much appreaciated. 

When i bought the flat quite a few years ago for my personal stay, Airbnb didnt exist and the presence of such a clause did not really matter. Life circumstances changed and I had to move out and it so happened at the time, my wife was in between jobs and so we decided to give Airbnb a try. 

I have a feeling that many such apartment buildings have similar clauses being leasehold and it is going to affect a lot of Airbnbs out there going forwards with Freeholders enforcing the clause. 

[Imtiaz2]

@Kirti4,

Think of the following:

1) you live in leasehold residential accommodation.

2) the accommodation has other residents

3) the accommodation comes with service fees based on “known” or “good guess” usage behaviour.

I’m response to 1, now you want to run an Airbnb. While on the face of it, it is a rental when the estate agent down the road rents a property out it’s a business - ergo you are running a business.

the temrs of your lease likely do not let you run a “business” from your leasehold.

most likely because, the designated use of that block is “residential” accommodation.

secondly the building insurance is likely also residential and doesn’t incorporate “businesses”.

while your “business” Is indeed residential, what if tomorrow someone opened a bakery/cake business and god forbid burnt the block down - who is liable and who else looses out?

2). While you can speak for your own behaviour you cannot for others - especially strangers.

safe to say when it’s our own we treasure it, but many on Airbnb don’t behave this way.  So long term you are likely to cause your fellow residents irritation if your guests don’t follow rules - which you cannot make them do.

put the shoe on the other foot, how would you feel about noisy randoms in your block that you had no control over?

3) let’s say points 1 @& 2 dont exist.  The other likely reason for objecting is that the service fee usually covers maintenance from wear and tear.  That is the odd shopping bag scuff or the odd light replacement or perhaps keys, locks and gates.

when you use something frequently you understand how it operates and work with the “quirks”.  When you introduce Airbnb strangers you introduce frustration and potentially increase the breakages, or the number of suitcase scuffs goes up dramatically, so the cost of maintenance goes up.  This cost is split across all leaseholders.

wpuld you be happy to pay a higher service charge for all these niggles, but not have a share in your neighbours Airbnb profits?

You may not like it or agree with it, but there is logic behind such clauses.

as a landlord with several lease and freeholds, I don’t rent out any of my leaseholds using short term rentals.

hope that helps with s little more reasoning behind what you are facing?

imtiaz

[Sean377]

I have deleted this post--sorry!