AirBnB, Unlawful Subletting and Breach of Lease.
It is now more common than ever that a prospective tenant will procure a tenancy with the intention of subletting without permission. This is known as ‘unlawful subletting’.
With Her Majesty’s Government having rubber stamped the short term letting of residential premises, the less aware and ‘hands off’ Landlord now faces grave consequences.
A Landlord can be a private individual, a trust, a charity, a company or even a local authority. Whichever the case, without a pro-active ‘hands on’ approach to property management an unlawful subletting could result in a claim for breach of Lease that requires premises not be used for commercial/business purposes, and or that the occupiers do not cause nuisance or noise beyond a certain time. An unlawful subletting can also result in placing a property owner in breach of the terms of its mortgage and/or insurance policy.
A direct consequence of short term lettings is a high turnover of occupiers usually for care-free leisure/recreational purposes and the intermediary tenant a profit. What follows are disgruntled neighbours that inevitably force the hand of the Freeholder to threaten/apply to the First-Tier Tribunal (Property Chamber) for a determination of breach. Armed with a determination that there has been a breach of Lease, a Freeholder can ask the County Court to order the property owner’s valuable long Lease forfeit resulting in a windfall to the Freeholder. Forfeiture is a draconian measure leaving the property owner with little option but to apply for relief resulting in costly proceedings and ultimately (if unsuccessful) the Lease being ordered forfeit.
A recent case involved the unlawful-subletting of a prime Knightsbridge penthouse to wealthy Arab families visiting London and requiring accommodation within walking distance of Harrods. The property was advertised via Airbnb and in shop windows along the Edgware Road. The property was initially rented to a single young female who held out to be a student at a rent of £3,625.00. The property was advertised as available for short term lettings at £525.00 per day.
With a landlord locked in to a 12 month fixed term tenancy (without a break clause) that precludes subletting, then the only option is to serve a S.8 Notice and issue possession proceedings. This is a costly and time consuming process that may involve a contested hearing. The process may place a costly, stressful and time consuming burden on any Landlord.
The lucky owner of the Knightsbridge property consulted solicitors who handled the Freeholder sensibly, holding it off long enough (having also served a S.21 Notice) to avoid costly Tribunal and Court proceedings. The property owner was able to recover possession under the accelerated route saving time, stress and money.
By Arman Khosravi, 21st November 2016.