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Nemcova and other headaches for those involved in short term lettings

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12th April 2017

There is no reduction in the interest regarding the legal implications arising from Airbnb lettings and other similar types of short term letting. Kerry Bretherton QC, property silk practising from Tanfield Chambers provides an update on the implications of this case.

In March 2017, Westminster North MP Karen Buck introduced a 10-minute Rule Bill in the House of Commons, supported by 9 other MPs, contending that property owners should be required to notify the Council of the dates that their property was going to be used for short term letting.

She indicated that Westminster Council was investigating some 1100 cases in which it was suspected that property owners had exceeded the deregulated 90 day limit. It is also understood that Westminster may make further approaches to the Department for Communities and Local Government for the exclusion of the Marylebone and Hyde Park areas from the deregulation.

It’s interesting to note that a Freedom of Information Act request led to a press release by the Department on 19 March 2017 which showed that office staff had used Airbnb 291 times from January 2015 to end December 2016.

Meanwhile, property lawyers continue to debate the implications of the decision in Nemcova v Fairfield Rents [2016] UKUT 303 (LC); [2017] 1 P. & C.R. 4 a case which will, inevitably, be the subject of further consideration by the courts. The Judge in that case noted that “Each case is fact-specific, depending upon the construction of the particular covenant in its own factual context,” and so declined to give the general guidance sought.

What was the Nemcova case?

Nemcova, concerned a long lease in which the lessee covenanted not to use or permit the demised premises to be used for any purpose other than “as a private residence”.

It was held that the user had breached this covenant by short term letting on the basis that use as a “private residence” required a degree of permanence going beyond being there for a weekend or a few nights in the week.

Argument before the Tribunals in Nemcova were narrowly focused. A key feature which led to the determination of the Upper Tribunal Judge was the duration of the letting and the fact that other leases in the block contained similar covenants suggesting that the intention was, in part, to protect other lessees.

It will be interesting to see the extent to which lessors seek to profit from this decision but must be noted that different considerations may arise where only part of the flat was let. Further, there may be additional arguments which could be deployed in support of the argument that the premises were used as a private residence in a further case.

Future implications

It remains to be seen how far councils in other parts of the country will use planning powers and the raft of tools available to local government for addressing anti-social behavior. It is clear that short term letting is here to stay and that, broadly, the key focus of the authorities is not upon a wholesale rejection of the model, but, rather on finding a method to ensure that hosts are responsible for the extent of the lettings.

The rise of Airbnb

In a presentation made prior to the 2016 RICS Inaugural World Built Environment Forum, Chip Conley, Airbnb’s Head of Global Hospitality Strategy traces the growth of Airbnb from 2008 when it was founded.

Two of the three co-founders had the idea when they offered airbeds and homemade breakfast in their living room to three guests who were unable to find accommodation anywhere else. Today, Airbnb is operating in two million homes and 34,000 cities in 190 countries.

This article first appeared in RICS newsletter and can be viewed here.

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