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Read this if you let out property.

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Property Owners who let out their property for short-term holiday or business lettings could be in breach of User Covenant.

In a recent case appealed by the Tenant from the decision of the First-Tier Tribunal, the Upper Tribunal (Lands Chamber) considered whether a user covenant in a residential lease that prohibited use other than as a private residence had been breached by a series of seven short term lettings of the apartment over a period of 12 months.

In Nemcova Fairfield Rents Ltd [2016] UKUT303 (LC) the landlord was pursuing a determination that there had been a breach of the user covenant in the lease and relied on a much older case of Tendler v Sproule [1947] 1 ALL ER 193

The tenant gave evidence to the effect that:

  • she paid the council tax;
  • the apartment was let to business visitors (as opposed to holiday visitors and had been it out only for a periods totalling 90 days in any 12 month period;
  • the apartment was maintained as the tenant’s main residence but she shared her time between her apartment and the apartment of her boyfriend;
  • when not let out the tenant was at the apartments between 3 and 4 days each week;
  • She had set up a website to advertise the apartment as an alternative to a hotel and used the services of a reservation system website which marketed the apartment more widely that her own website.

The Upper Tribunal (Lands Chamber) held in dismissing the tenant’s appeal against the First-Tier Tribunal decision that the tenant had breached a covenant in the long lease of the apartment that prohibited use of the flat for any purpose whatsoever other than as a private residence.

As the individuals who had occupied the apartment under the short-term lettings had not occupied the apartment as their home, it followed that the Tenant was using the apartment for a purpose other than as a private residence.

Although this decision turns on its facts and the construction of the lease in question, tenants of apartments and residential landlords may find the decision interesting given the increasing popularity for residential property owners to advertise their properties on the internet and elsewhere, as alternatives to hotels, so as to produce an income stream.

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