Are short-term holiday lets "commercial" or "residential" (or "depends")?

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    Are short-term holiday lets "commercial" or "residential" (or "depends")?

    Hi,

    I have a flat in a block where one other leaseholder currently lets out their flat on AirBnB for short term holiday lets. I've got no moral objection to this, and things have generally been fine, but lately the tenants they've had visiting have been noisy late at night, generally disruptive during the day and very rude / unapologetic for their behaviour, and it's starting to have a detrimental impact on the enjoyment of the block for other residents.

    This is in central London, and my understanding is that without a change of use, the law (and AirBnB) will restrict short term lets (i.e. less than 3 months per letting) to a maximum of 90 days a year. This means it doesn't qualify as a Furnished Holiday Let since it can't be let for the minimum 105 days per year required to be an classified as an FHL.

    I've reviewed my lease (which is the same for all flats in the building), and there's a clause that states the flats must be used for "residential" use and not for "commercial business purposes". I'm therefore interested in whether or not short term holiday lettings would be considered "commercial" even if the flat doesn't qualify as an FHL.

    Could anyone clarify whether short term holiday lets are considered "commercial" or "residential" if the property is not an FHL? Or does it depends on other factors as well?

    Thanks,

    Mike

    #2
    Definitely business.

    Comment


      #3
      So I found this page which seems to indicate that the exact working of "residential purposes" means short term lets aren't allowed regardless of status as an FHL...

      https://hardwicke.co.uk/nemcova-v-fa...ort-term-lets/

      “It does seem to me that in order for a property to be used as the occupier’s private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights in the week. 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."

      Our lease uses the words "To use and occupy the flat as a single private residence" so I think that matches the criteria in this case. Hopefully it won't need to go to FTT, but it's good to know there's possibly a precedent for similar circumstances.

      M

      Comment


        #4
        This is a commercial business,

        For a property to qualify as a FHL, it must satisfy certain criteria eg:
        • be available for renting for 30 weeks a year
        • be let commercially as a holiday property for at least 15 weeks; and
        • if occupied for more than 31 days by the same person/people there must not be more than 155 days in total of such longer lettings.

        I would tackle it from 2 main angles, notify the leaseholders of the flats, as well as the freeholder of the property. I would also contact the local planning office as the planning class should be changed, which they will most likely not allow the use as a FLH and therefore would be in breach of planning.

        Comment


          #5
          Originally posted by pointy View Post
          I've reviewed my lease (which is the same for all flats in the building), and there's a clause that states the flats must be used for "residential" use and not for "commercial business purposes".
          Is there a clause in your lease that states that leases to other properties have to be on the same terms as your lease - or anything that allows the freeholder to alter the terms of other leases?

          My lease, for example, contains a clause that states something along the lines of (greatly paraphrased):
          "It is intended that the leases of other properties will contain similar terms to clauses X to Y, but nothing will prevent the granting of leases more favourable to the tenant except for the proportion of service charges."

          Although ash72's comments regarding planning regulations are definitely worth following up, you also need to consider the possibility that the freeholder has given permission for the other property to be used in this way.

          Comment


            #6
            The answer turns on the use to which the tenant puts the property and not on whether what the landlord does is considered to be a commerical activity.

            Comment


              #7
              Thanks for all the replies everyone.

              To follow up with some more information:

              + It turns out that the leaseholder is actually renting the flat as an AST to a tenant and was (allegedly) unaware it was then being sub-let it on AirBnB. The leaseholder now officially "knows" about this so we'll see what happens next. I think we have the option of notifying AirBnB ourselves that the listing is in breach of the prevailing lease, but I don't know whether that will have any effect or not...

              + @ash72 - If it were the leaseholder doing the short-term lets, I don't think they need to apply for planning permission for a change of use in Greater London as long as it's no more than 90 days per calendar year (correct me if I'm wrong) in which case it wouldn't qualify as an FHL anyway. However, the lease is more restrictive and says it must be "residential use only" so that supersedes the 90-day allowance.

              + @macromia - I'm as confident as I can be that it's the same lease for all flats (obviously we'd need to check their specific lease if we planned to start any legal action), and I don't think they've been granted consent for short term lets by the freeholder. I've been a director of the RTM company for several years now and I've not seen anything come through about change of use, and we also completed the Collective Enfranchisement process last year so I'm a director of the freehold company as well now and nothing has come through requesting permission since then either.

              + @Lawcruncher - I found your almost exact wording in the case listed below (see second quote) :-)...

              + I also found this case https://hardwicke.co.uk/nemcova-v-fa...ort-term-lets/ which seems to say that short term lets are specifically *not* classified as "residential use". The summary says each lease needs to be assessed case-by-case but our wording is so similar to the quoted sections in the article that I'm pretty sure the same ruling would apply to our situation.

              Some relevant sections of that page quoted for posterity:

              "[1] A long lease contains a covenant not to use the demised premises or permit them to be used for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence. If the leaseholder advertises on the internet the availability of the premises (a flat) for short term lettings and grants a series of such lettings, do the leaseholder’s actions breach the covenant?"

              it is the use being made for the time being, by the occupier for the time being, that is material

              "It does seem to me that in order for a property to be used as the occupier’s private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights in the week. 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."

              My interpretation is that short term lets are considered "not residential" (it's unimportant whether they're considered "commercial" or not, just that they're "not residential"), and since the lease says the flat can only be used for "residential purposes" the leaseholder is currently in breach of lease by allowing it to be used for non-residential purposes.

              We'll give the leaseholder some time to address the situation, but it looks like we've got a reasonable case to make if we *do* have to take it further.

              Thanks again,

              Mike

              Comment


                #8
                Hi all,

                Thanks for all the replies.

                I just wrote a massive follow-up message but the system flagged it as spam and took it away - I'm not sure if it's recoverable by a moderator or whether it's lost forever now?

                M

                Comment


                  #9
                  Send a PM to Moderator 2 and ask him to post it for you.

                  Comment


                    #10
                    How does the lease define "commercial" please? That's surely what matters...
                    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                    Comment


                      #11
                      A good indication, to see if other leaseholders have been given permission is to read the insurance policy for the freehold, if it's a residential only policy then this would indicate there is no commercial elements.

                      Comment


                        #12
                        I don't think it matters what it is, what matters is what it isn't.
                        If the lease says that the properties must be used for residential purposes, AirBnB lets aren't residential - their terms and conditions say that, for a start.
                        No one staying a few days can pretend to be living there, so it's not residential.

                        The lease may have a further, related provision about not using the flats for a commercial business purposes, but there's no point getting into the semantics of what the use actually should be called - it isn't residential and the rest is just extra noise.
                        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                        Comment


                          #13
                          jpkeates - I came to the same conclusion in my mega-reply (which got spam-filtered :-(). I've PMed Moderator 2 so hopefully it'll appear retrospectively...

                          Comment


                            #14
                            It's good that filter.
                            It manages to block the longer, most considered comments that people take the time to check before posting.
                            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                            Comment


                              #15
                              I can't face typing out the whole message again, but the gist was:

                              + It turns out the leaseholder has rented their flat to a tenant on an AST who is actually subletting on AirBnB. We've informed the leaseholder, and we're basically waiting to see what happens next. The listing has disappeared from AirBnB anyway, which is promising, but I'm not holding my breath...

                              + I found this article which describes a very similar situation in terms of leases that only allow "residential use" and how that is interpreted by the powers that be: https://hardwicke.co.uk/nemcova-v-fa...ort-term-lets/

                              The long and short is that I'm pretty sure *our* lease disallows short term lets since they're not deemed to be "residential" and the lease has very similar wording as that case, but it might take a trip to the First Tier Tribunal to get that determined if we can't resolve the situation informally.

                              Comment

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