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The risks of
short term lets

The risks of short term lets

Published: 7th September 2018
Area: Real Estate & Planning
Author: Sophie

Many institutions now offer a range of courses with varying durations of time and periods of attendance required from their students.

Accordingly, students are not necessarily obliged nor able to commit to any one type of accommodation for their period of study. Short term lets within the real estate market are on the rise and online platforms such as Airbnb allow occupiers to reside and jump around from place to place with relative ease. Consequently, the relatively affordable prices and flexibility of the short term letting market makes it an appealing option for students experiencing changing circumstances during their studies.

Despite the apparent ease, short-term lets aren’t without risks. There is the question of the circumstances in which short-term lets are permitted. Many of those who list their properties on websites such as Airbnb are leaseholders as opposed to freeholders, and are potentially at risk of breaching a covenant in their lease by renting out to a third parties. In such circumstances student occupiers may face uncertainty as to their occupational status if problems arise. In most cases the occupier knows very little about the terms of the head lease or details of the property they are staying in. Case law is slowly developing around this area and is able to shed some light.

In Roundlistic v Jones ([2016] UKUT 325) the Upper Tribunal (Lands Chamber) (UT) found in favour of a landlord who wanted to enforce a breach of covenant by their tenant. It was held:

“Although there was not any express prohibition against underletting in the lease, the user clause provided that the premises could not be used “for any purpose whatsoever other than as a single private dwelling house in the occupation of the Lessee and his family.”

In other words, the leaseholder who granted the short term let was in breach.

In Nemcova v Fairfield Rents Limited ([2016] UKUT 303) the UT had to determine whether there was a breach of a covenant if it was stated in the tenant’s clause that she was:

“Not to use the Demised Premises or permit them to be used for any illegal or immoral purpose or any purpose whatsoever other than as a private residence.”

The lack of authority on the meaning of “private residence” meant that the UT had to emphasise the ruling was confined to the facts alone. A breach was found, and the decisive factor was the short duration of the occupation. LJ Clarke stated:

“In my judgment, I do not consider that where a person occupies for a matter of days and then leaves it can be said that during the period of occupation he or she is using the property as his or her private residence. The problem in such circumstances is that the occupation is transient, so transient that the occupier would not consider the property he or she is staying in as being his or her private residence even for the time being.”

Again, the leaseholder who granted the short term let was in breach.

With alternatives to purely conventional student accommodation arrangements on the rise, universities could consider raising student awareness of the legal issues that may arise in such cases.

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