With the growth of online sites such a AirBnB and Ownersdirect, virtually any property owner can set up a bed and breakfast enterprise overnight – literally. But what pitfalls should you watch out for?
In a recent case, the owner of a flat / apartment had advertised the flat on the internet for short-term lettings and granted a series of such lettings. The owner stayed at the flat about three or four days a week and had let out the flat for about 90 days a year on short term lets.
Unfortunately, the owner had not read the terms of their lease that prohibited the use of the flat “ for any purpose whatsoever other than as a private residence.” The Landlord of the apartment block considered the owners short term agreements to be in breach of the lease terms, and commenced legal action against the owner.
The Courts held that the Property owner breached a covenant in their long lease of the flat by ruling that a short term occupier “would not consider the property he or she is staying in as being his or her private residence even for the time being.” The Landlord was awarded damages.
Even freehold house owners should consider the fine print in their title deeds. Quite often there will be a covenant preventing the owner form using the Property for any trade or business or for anything other than the occupation of a single family only. Granting short term lettings to strangers could breach either of these restrictions and give rise to a claim by neighbouring owners or even the original house builder.
Anybody considering such ‘rent a room’ schemes should consider the above points carefully, but also the issues relating to planning, insurance and tax liabilities.