Is holiday-letting a breach of lease covenants?

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    Is holiday-letting a breach of lease covenants?

    I have a problem with my manage company they claim I cannot do holiday lets even though my solicitor says I can after all he advised me when I bought the flat for that purpose.There are no exclusions for holiday use in the lease but it states for residential purposes as a single private residence in the occupation of one family or household only, would they be right to say this covenant excludes FHLs (furnished holiday lets).I own a portion of the freehold of 8 flats and I have a 999yr lease I am also part of the management co which is made up of the other 7 lessees.There are also three flats let as AST's which are according to the management not in breach of the lease even though they are subletting the same as me.The difference being I am classified as a business if I let to holdaymakers.The law changes in April and I will no longer be taxed as a business and local government are making moves to scrap the small business status on FHL'S so am I in breach nobody seems to positively know am I a business or am I private residential the same as a AST.

    #2
    This bit is critical: for residential purposes as a single private residence in the occupation of one family or household only.
    L argues that sub-letting for holiday use is a breach. You argue that it's not.
    A holiday T is:
    a. using the flat 'for residential purposes as a single private residence';
    and, I assume, the flat is
    b. 'in the occupation of one family or household only'.
    You might be deemed to be running a sub-letting business.
    Caselaw will define if you are in breach. One example is Caradon District Council v. Paton [2000] EGCS 59, Court of Appeal.
    See post #6 on http://www.landlordzone.co.uk/forums...don#post104179
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      Many thanks for the info Caradon v Paton

      Comment


        #4
        I will continue decision hinged on housing stock built with public take take it had not been then short term residence ok(holiday let).I also take it HOLIDAY LET is use for private residential.

        Comment


          #5
          Is a FHL a business

          Can any body tell me is a furnished holiday let private residential or is it or would it be in breach of private resdential one family one household this covenant is in my lease which I am accused of breaking by my management co by letting to holiday makers & Jeffery I know you seen this before THANKS for the previous your comments have been usefull more would be appreciated.

          Comment


            #6
            difference between letting & subletting

            I own part of the freehold along with seven others of a block of 8 flats we are all also leaseholders of 999yr lease on the flats.Three of the flats are assured short hold tenancies the rest owner occupied bar mine which is a holiday let.I form part of a management co along with the 7 other freeholders/leaseholders every time we have a meeting they ask me stop letting my flat out to holday makers because I am running business by using the flat as a holiday let.I have been in touch with the leasehold advisory centre that also agree that it is a business & in breach of private residential use they also say I should not sublet either, when I confronted the other members of the management co they were also breaking the lease by subletting to AST's they denied it and said they are not subletting but letting because they are also freeholders as well as leaseholders.

            Comment


              #7
              I have to say that sounds like a nonsense argument to me.

              Running a business would be something like selling stuff or offering services.

              Either letting out is allowed or it isn't, they are letting our for a minimum term of 6 months - you are letting out for a minimum term of 1 week there is no difference. The other occupents just don't like it.

              It's up to you and your relationship to the other freeholders but I would just say no. If challanged further say I will be continuing to do holiday lets and the only thing that will make me stop is a court order.

              It might be worth taking a copy of your lease to a lawyer to get chapter and verse on what it allows and dosn't - in fact start by reading your lease yourself and see what it says - if it is silent on the matter you don't have a problem. If it just says you can't run a business just say you are no more running a business than the people renting out on ASTs.

              Comment


                #8
                It's a compelling argument that has been put forward. I am not a lawyer though.

                From a tax perspective, running a holiday let has (provided you meet certain conditions, largely to prove that it is actively a holiday let) been treated as a business with the concessions that go with that - ability to put the income into a pension; business asset taper relief etc. etc.

                Comment


                  #9
                  What does it say in your long lease if it says it is forbidden then it is forbidden, regardless of whether you own part of the freehold or not.
                  If it says permission must be granted from the freeholder well then thats a different matter, it may be down to a vote.

                  Comment


                    #10
                    Nothing in the lease says I can not sublet my solicitor advised me on that when I bought the place holiday let is ok and he still stands on that decision but there seems to be a lot of confusion over this.They intend taking me to LVT tribunal to decide.

                    Comment


                      #11
                      A bit more common sense: You and six others are in an association where you jointly own the freehold of the flats. To preserve your own rights of use of your own particular flat, you and your fellow owners have granted you a 999 year lease. Thus there is no possibility of you being dispossessed by a vote of 6 to 1. Thus you are a lessee of your own particular flat and this lease governs what you can and cannot do. If your lease does not prohibit subletting (as a solicitor has advised you is the case), then you (and your fellow lessees) can sublet using an assured shorthold tenancy. I would have thought that this is as much a business as letting to holidaymakers. I make my living from the rents I receive from my tenants - is that a business or what? However, my home gives absolutely no indication that I run a business from there and it never will.

                      P.P.
                      Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

                      Comment


                        #12
                        Originally posted by sundance View Post
                        ...they...said they are not subletting but letting because they are also freeholders as well as leaseholders.
                        Wrong. They may as well argue that they have no long leases.

                        Where A and B grant a tenancy to B, and B grants a tenancy to C, the letting to C is a sub-tenancy.

                        Ignoring the possibility that sub-letting generally may be prohibited in any event, letting for holidays will be prohibited if the lease says that holiday lettings are prohibited or insists on a minimum period of sub-letting that exceeds what is normal for a holiday.

                        If the previous paragraph does not apply and the lease allows sub-letting with consent such consent not to be unreasonably withheld (and that is implied if not stated) then whether it is unreasonable to refuse consent to sub-letting for holidays has to depend on the circumstances.

                        It is quite possible that there is some provision in the lease other than in the alienation clauses (i.e. those that deal with assigning and sub-letting) that could be invoked to prevent sub-letting for holidays.

                        Comment


                          #13
                          There is no restrictions on subletting or holiday lets this lease has been mulled over by 3 qualified solictors one of which was my conveyancing solictor when I bought the flat before I made the purchase it was made clear to him our intention for holiday let.One thing that baffles me the lease hold advisory people seem to disagree we have been in touch with them twice & got a different reply each time which niether was in our favour.

                          Comment


                            #14
                            I would be inclined to go with the opinions reached independently of three solicitors. I doubt that the people you spoke to at lease-advice were as legally qualified or experienced as the solictors you contacted!

                            P.P.
                            Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

                            Comment


                              #15
                              Originally posted by sundance View Post
                              ... because I am running business by using the flat as a holiday let.I have been in touch with the leasehold advisory centre that also agree that it is a business & in breach of private residential use they also say I should not sublet either ...
                              This issue arises more than some might think. In my experience, there are (at least) two types of clause dealing with the issue you describe:
                              a) a prohibition on running a business from the premises
                              b) a requirement that the premises are used only as a residence.

                              Sometimes these requirements are combined together in the same clause.

                              The caselaw is interesting and not always helpful (in the current circumstances at least). For example, a tenant who takes in lodgers on a commercial basis would generally be in breach of (a), but not if the lodgers live with the tenant as part of their family (Segal Securities v Thoseby, 1963).

                              Sub letting a whole flat to someone who enjoys exclusive possession and occupies it as their home will not usually be in breach of (b), provided the landlord does not provide "substantial" services to the sub tenant (Lee Verhulst Investments Ltd v Harwood Trust 1972 and Graysim Holdings v P&P Property Holdings 1994). However, such activity might still be in breach of (a).

                              I am not aware of any case law dealing with the OP's specific circumstances, but I am afraid that it seems very likely to me that using the flat for holiday lettings would probably be in breach of both (a) and (b).

                              Comment

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