Airbnb Boom

Founded in August 2008 and based in San Francisco, Airbnb is a “trusted community marketplace for people to list, discover and book unique accommodation around the world”-online or from a mobile or tablet. Whether a room for a night, a house for a week or a villa for a month, Airbnb connects people to unique travel experiences in more than 34,000 cities and 191 countries. It has become immensely popular over the years and has many benefits for both hosts and travellers. Hosts get to meet people from all over the world, while making a little extra money and travellers can often stay for less than the cost of a hotel room.

That said both property owners and their tenants may well find that they are either breaching their mortgage or insurance conditions or their rental agreements respectively by participating in Airbnb. Indeed this is highlighted by a recent English case Iveta Nemcova v Fairfield Rents Limited (2016). A tenant asked the First-Tier Tribunal whether she was contravening a clause of her lease agreement by renting out the property using Airbnb. The Tribunal found in favour of the landlord and the tenant appealed to the Upper Tribunal.  She argued that there was no specific term in her lease that said she could not sub-let but only a clause saying that the property had to be used  as “a private residence.” The tenant contended that as the lease referred to “a private residence” rather than “the private residence” that she could let out the flat, as it did not need to be the tenant herself occupying the property providing it was being used by someone as “a private residence”. The decision of the Upper Tribunal was that Airbnb short term lets were lacking the necessary degree of permanence to amount to using the property as “a private residence” and found in favour of the landlord.

Of course this is an English case and is not binding in Scotland but tenants here should be equally aware and check their leases. In Scotland in terms of the Housing (Scotland) Act 1988 Section 23, there is an implied condition that a tenant in an assured or short assured tenancy can only sub-let or assign his or her lease with the landlord’s consent unless the lease specifically states otherwise. So if a tenant in Scotland wishes to let out property he or she would need to examine the stipulations of the lease for an express clause and if there is none then the landlord’s permission should be sought. The landlord can refuse and there is no need for the refusal to be reasonable.

A property owner or a landlord considering using Airbnb should seriously give thought to the implications before doing so. A property owner with a mortgage may find that the lender’s conditions prohibit the owner from letting out the property at all. The landlord with a mortgage may only be able to let out his or her property using a short assured tenancy. Breaking these terms could mean the agreement is invalidated and risk the mortgage being called up.

Extremely importantly a property owner or landlord’s insurance policy will not normally cover short term lets or subletting, so if anything goes wrong the policy may not be valid. Also depending on the letting, an HMO licence may be necessary and if the letting or subletting amounts to a change of use then planning permission may be required.

If you would like more information please contact Alison Gourley by email on ajg@mitchells-roberton.co.uk or by calling 0141 552 3422.

This entry was posted in In The News, Legal by Alison Gourley. Bookmark the permalink.

About Alison Gourley

Alison graduated from Edinburgh University School of Law in 1991. She joined Mitchells Roberton in 1996 and became an Associate thereafter. Alison specialises in both commercial and residential conveyancing, advising individuals, large and small businesses, banks, charities and further education institutions on all property transactions. Having 20 years experience in property law Alison has developed excellent relationships with surveyors, independent financial advisers and banks so is ready to act swiftly and effectively to meet her clients’ needs in an ever changing property market. She enjoys getting to know her clients and is committed to giving them an efficient service and is always friendly and approachable. She is also involved with the marketing aspects of the firm and is the solicitor in the office who trains the conveyancing paralegals. Alison is married to a photographer and has one child. In her free moments she likes to keep fit. She is a talented amateur artist and loves nature and the great outdoors.

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