AirBnB. Risk and reward.

Airbnb – risk and reward

Every now and then a property law decision comes along which could actually change society. The recent Upper Tribunal one in Nemcova –v- Fairfield Rents is one such.

The question for the tribunal was simple enough: is a covenant to use a flat only as a private residence breached by someone who allows her own flat to be used by airbnb customers? The flat in question was Ms Nemcova’s only home: she had a boyfriend at whose home she sometimes stayed overnight, and she had created and ran full-time a website on which she advertised the availability of her property and her boyfriend’s property for airbnb accommodation, for which the flat was used for some 90 days a year.

Does the flat nonetheless remain in use as a private residence? No, said the Tribunal. What matters is not whether it remains Ms Nemcova’s private residence – presumably it does, as a question of ordinary language – but whether the use being made of it at any given time is by someone who is using it as their private residence, which suggests a degree of permanence which Ms Nemcova’s short-term lettings to businessmen did not have.

This is not the first decision in this area – some have gone one way, some the other – but it feels as though it could be a watershed. Almost always airbnbers are letting flats, and almost always leases of flats have a covenant of this kind in them. Airbnb is increasing exponentially in popularity – it’s one of the ways young people and others look to fight back against the increase in property prices and set their foot on the ladder.

Many such will feel that in this day and age such a practice is a normal use of one’s home and the meaning of ‘private residence’ ought to move on accordingly. But one of the hoariest principles, not only of property law but of English common law itself, is that a contract has to be construed according to the time and place where it was made.  If a “private residence” didn’t involve airbnbing in the 1960’s when a lease was granted, it can’t do so now.

Airbnbing is a flexible business. Whether doing it on a less industrial scale, or on the basis that the guest simply has a room and shares occupation during their presence, may remain to be seen. But unless the Court of Appeal takes a hand, this decision is going to be a material blow to the practice. However, landlords with a legitimate interest in preventing this sort of use will be cheering at the addition of another card to their hand.