Q&A - Subletting

ANSWER

Andrew Bailey FCILEx, Associate at property law firm JB Leitch, is a specialist in a range of breach of lease matters. Here, Andrew provides advice in response to the reader’s recent enquiry regarding sub-letting under the clauses of their lease:

“Allowing the property to be used and occupied as a holiday let for a few weeks or a month at a time constitutes an underletting for which you will be required to obtain the Manager’s prior written consent which they must not unreasonably withhold or delay. The Manager can charge a fee for considering any request to underlet subject to this covenant.

However, holiday lets of a few weeks or a month via AIRBNB and other similar online platforms, in my experience, is an undesirable type of underletting that the Manager is unlikely to grant consent for. The covenant to underlet is not to be considered in isolation as the lease will probably contain additional covenants relating to use and occupation of the property.

A very common restriction contained within a residential lease is not to use the property otherwise than as “a private residence”. The Upper-Tribunal found in Nemcova v Fairfield Rents Limited [2016] UKUT 303 (LC) where a property is used and occupied for a number of days/nights by transient, fee paying guests, this will not amount to the property being “a private residence”.

The lease may also contain covenants not to part with possession and/or occupation of the whole or part only of the property, not to use the property for trade or business and not to do anything that will result in the buildings insurance premium increasing or voiding the policy. Additionally, there may be an obligation to ensure that any relevant planning laws have been complied with and furthermore, the Manager will consider the impact of the holiday lets upon owner occupiers who are unlikely to want to reside amongst transient guests.

Whilst not binding authority, the appeal decision of Bermondsey Exchange Freeholders Limited v Ninos Koumetto (as Trustee in Bankruptcy for Kevin Geoghegan Conway) [2018] is supportive of the above comments and is likely to carry weight in similar litigation.   

Proceeding to use the property for holiday lets without having first obtained the Managers prior written consent will constitute a breach of lease for which you may face enforcement action and which may include an injunction being granted against you to prohibit you using the property in such a manner. It is also likely you will be ordered to pay the Manager’s legal costs of the proceedings and which will be considerable. Should the Manager refuse consent to allow you to underlet as proposed, you may apply to the First-Tier Tribunal to overrule the Manager’s decision. That being said, I would be pessimistic about the prospects of such an application given the nature of the proposed letting and the other considerations highlighted.”           

I hope this provides helpful in clarifying your position.

Andrew Bailey FCILEx, Associate at property law firm JB Leitch