Short-term letting

Whether use of a property for ‘Airbnb’ subletting breached terms of lease

The background

Bermondsey Exchange Freeholders Limited v Ninos Koumetto (as Trustee in Bankruptcy of Kevin Geoghehan Conway [2018] concerned a flat in South London, let to the leaseholder by a 999-year lease. The leaseholder began to sublet the property, firstly on assured shorthold tenancies in common with many of the building’s other leaseholders, and subsequently on short-term lets through websites such as Airbnb. The landlord, a company owned by the leaseholders of the building, sought an injunction against such use on the grounds of nuisance, security and impact on the community.

The County Court granted the injunction, which prevented the leaseholder from using the property for short-term lettings. The landlord’s consent had not been given to the use of the property for this purpose, and the leaseholder had breached the terms of his lease. The leaseholder’s Trustee in Bankruptcy appealed the decision, in particular addressing the interpretation of the lease provisions and the terms of the injunction.

The decision

The Trustee’s appeal was dismissed and the injunction confirmed. The short-term lettings breached the terms of the lease which prohibited ‘parting with or sharing possession or permitting any company or person to share occupation of the flat except by means of an assignment or underlease with the consent of the landlord’.

Further, by letting out the property to paying visitors, the property was no longer being used solely as a residential flat but for commercial hire, which was in breach of the lease’s user covenant prohibiting use other than as a residential flat occupied by one family. Without the landlord’s consent, the leaseholder was in breach of his lease terms, which were clear.

Advice and action for landlords

The terms of the lease in this case are common across most residential leases, and this decision supports landlords who may be experiencing difficulties with leaseholders and occupiers advertising properties for short-term lets through Airbnb and similar sites. We anticipate that similar litigation will continue to develop as landlords become more aware of breaches.

Lease terms are clear and unambiguous, and it is fair to seek an injunction on grounds such as nuisance, security concerns and disruption to the community of the building. Fundamentally, landlords are reassured that an injunction is an appropriate and viable course of action against leaseholders who breach covenants in this way.