Nemcova v Fairfield Rents – the private residence test

The only reported Airbnb case so far has attracted media attention and a small flurry of articles and opinion pieces.

Those leaseholders who have taken advantage of Airbnb or indeed any other platform for short term lettings, will no doubt now be reviewing their own leases and would be well advised to cease offering out their properties without obtaining legal advice first.

But what does the Nemcova case mean for registered providers?

The relevant clause in the case was that the leaseholder was “Not to use the Demised Premises or permit them to be used for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence.”

The Tribunal accepted that the clause contemplated that persons other than the lessee might use the premises and that there would be no breach so long the property was being used as a private residence. However, the duration of the occupier’s occupation was material: very short term lettings of days and weeks could not be considered occupying as a private residence as there was not a sufficient degree of permanence.

As far as RPs are concerned, the case is important in the context of shared ownership and right to buy leases but less so in respect of tenancies.

For assured, secure and fixed term tenancies, the “only or principal home” condition combined with a restriction of subletting of the whole means the landlord is already in a much stronger position when seeking to enforce the terms of the tenancy. There may also have been a breach of the condition not to use the premises for business purposes and the Airbnb occupiers may have caused nuisance and annoyance to neighbours. So, as with any possession claim, the landlord should look to rely on as many breaches as possible as well as relying on an NTQ or forfeiture notice in the case of a fixed term tenancy) on the basis of non-occupation/subletting .

For shared owners, the model form of shared ownership lease specifies that the property should not be used as anything other than a private residence in single occupation so the Nemcova case is directly relevant. Unlike in Nemcova subletting is completely prohibited until the shared owner has staircased up to own 100% of the Lease so this provides a further ground for possession. Once it is a long lease however, the absolute prohibition on subletting falls away, but the term in respect of use as a private residence remains and can be relied on.

For leaseholders who have bought their properties under Right to Buy/ Preserved Right to Buy (or indeed Voluntary Right to Buy in the future), subletting is normally permitted (with conditions) so is unlikely to form the basis of a claim. However, the usual term relating to use of the premises requires the leaseholders “not to use or permit or suffer to be used the demised premises or any part thereof other than for residential purposes”. This wording is distinguishable from “private residence”, however it leaves open a potential argument for social landlords that, by analogy with Nemcova, residential purposes cannot include use as what is effectively with Airbnb, a holiday let.

Leases and tenancy agreements can and do vary from the standard terms cited above so the specific terms of any lease/tenancy must be checked before threatening legal action. If in doubt, always seek legal advice before serving any notice or issuing proceedings.

For further information, please contact Anna Bennett. Anna is a Solicitor at Devonshires Solicitors LLP, specialising in Housing Management Litigation.

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