THE DANGERS IN THE USE OF HOUSES AND FLATS FOR SHORT-TERM LETTINGS/AIRBNB ETC. WHERE COVENANTS MAY BE ENGAGED TO MAKE SUCH USE UNLAWFUL.
Andrew Francis, Barrister, Serle Court Chambers, Lincoln’s Inn.
(Author of Restrictive Covenants and Freehold Land, A Practitioner’s Guide, 5th Edition, LexisNexis.)
Introduction
1.1 Anyone who owns a house or flat is likely to be subject to some form of control on the way in which it may be used. These fall within the legal term “restrictive covenants”. HM Land Registry statistics show that there are nearly 27 million titles registered in England and Wales and that about 80% of them are subject to restrictive covenants. Therefore, the chances are that your house or flat will be subject to covenants in various terms.
1.2 The type of covenant which will be of concern to anyone proposing to use their property for short-term letting or Airbnb etc. will be a covenant preventing the use or occupation of the property otherwise than as a single private dwelling house, or flat, or for private residential purposes, or which prevents parting with or sharing possession of the property. There may also be covenants which prevent the property from being used in a way which causes a nuisance or annoyance to your neighbours. These are just examples of the covenants which may be engaged where properties are used for short term lettings etc. Another aspect of this issue is that of student lettings. In such cases much will depend upon the nature and duration of the letting and the terms of the relevant covenant. In some cases the Courts have held that where there will be permanent residence by the students for the academic year, if not longer, that is not a breach of a covenant requiring use of the property as a single private dwelling house. However, even in this type of case legal advice must be sought on the effect of any relevant covenant and the relevant consents obtained from lenders and insurers etc. in any case.
1.3 Being in breach of a covenant is a serious matter and the consequences must not be underestimated. If the covenant is enforceable and you are in breach of it, the Court can make an Order known as an injunction preventing you from carrying on the letting and you will probably be liable for the costs of the enforcing party, which combined with your own costs can be very expensive. If you breach such an Order you may be fined or sent to prison.
1.4 There are other consequences of using your property for short- term letting or Airbnb. You may well be in breach of your mortgage conditions and your house and buildings policy as well as not being covered for damage to your contents. You may well also be in breach of planning control. The local authority can take enforcement action to prevent the use which is in breach of the permitted user. These are all separate risks from breaches of covenant and this article deals with only that topic. It is worth noting that even if the short term letting does not breach any planning control, if a covenant will be broken by that letting, the position under planning control does not prevent enforcement by the beneficiary of the covenant for its breach.
Steps you can take to avoid the problem
2.1 The first thing to do is to check your title “deeds”. In practice, as the title to your property will be registered at HM Land Registry, this will comprise the copy of the register of title which amongst other things describes the rights and obligation which affect your property (the covenants) and a plan showing its extent. In the case of a leasehold property you will also have a copy of the Lease and this will contain the covenants. Any covenants which affect your property will be shown on the register or contained in the Lease. You should obtain legal advice to check if there are any covenants which might prevent you from using the property for short-term letting etc. If there are none you will still need to check with your lender, your house and contents insurer and your local authority that the proposed use is not going to cause problems with any of them. Obtain their consent to the proposed use if that is needed and permitted.
2.2 If your title shows that there is a covenant which could be broken by short-term letting etc., you will need to obtain specialist legal advice about whether anyone can enforce the covenant. This is a particular tricky area of covenant law where special rules apply. In particular the rules relating to covenants affecting freehold titles are different from those applying to leasehold titles. In the case of the latter the general rule is that your landlord or management company will be able to enforce the relevant covenant. In the case of freehold titles the position can be far more complex. One important feature of covenants affecting freehold titles is that the “benefit” (i.e. the right to enforce a covenant) will not usually be noted by HM Land Registry on the title of the person who has that right. Therefore, your neighbours’ titles will not always tell you whether they can enforce the covenant. That is why specialist legal advice is needed to decide this issue. If no-one can enforce the covenant, even if it is shown on your title, you should be in the clear. You may also be able to get indemnity insurance to cover the risk of enforcement if that risk is considered low. There are specialist brokers who can arrange that.
2.3 Finally, if the covenant preventing your proposed use is enforceable, you may be able to apply to the Upper Tribunal (Lands Chamber) to modify the covenant to enable the short-term letting etc. to be carried out lawfully. Specialist legal advice is needed in cases where this may be an option.
Case studies
3.1 Caradon District Council v Paton. [2001] 33 HLR 34.
In this case the Court of Appeal decided that using former council houses in Polruan, Cornwall, sold to tenants under the “right to buy” legislation for short-term holiday letting—being subject to a covenant that they were only to be used as private dwelling houses—was a breach of that covenant. The Court ordered that use to stop. It is interesting that the Court noted that holiday letting meant a loss of dwellings for residents in Polruan. This remains a current issue nearly 25 years later.
3.2 Nemcova v Fairfield Rents Ltd. [2017] 1 P&CR 4.
This is an example of a breach of a covenant in a lease which required a one-bedroom flat in Enfield, London, to be used only as a private residence and not to part with possession of it. The tenant let the flat out to businesspeople for short term lettings of 3-4 days at a time over about 90 days a year, advertised on a website. That letting was a breach of the covenant. In leasehold cases there is the factor that the lease may be forfeit (brought to an end) which makes the risk of breach much greater than where the covenant affects the freehold title as that cannot be forfeit.
3.3 Triplerose Ltd. v Beattie. [2021] 1 P&CR 4.
This is an example of a case where the tenants’ advertisement of their flat in Newcastle upon Tyne on websites such as Airbnb and Booking.com for short term occupation was held to be a breach of a covenant in the flat’s lease not to use it for any purpose other than “as a private dwelling house for occupation by one family at any one time”.
3.4 In some cases the use of the property for short-term letting etc. may also be a breach of a covenant preventing use for business purposes. Much will depend upon how the letting is organised. If the letting is arranged through a third-party website, there may be no breach of such a covenant. However, if the owner arranges lettings directly and provides additional services for which a charge is made, this may be a breach of a “no business” covenant.
3.5 Other cases showing the way in which these covenants are considered are:-
- (i) O’Connor v Strata Plan No. 51 [2018] 4 WLR 22. Short term holiday letting held to be a breach of a private residential obligation in a law governing apartments in the Turks and Caicos Islands.
- (ii) Gibbins v Gibbins [2020] UKUT 335 (LC). Use of a flat in Hammersmith, London, for Airbnb lettings held to be a breach of covenants against parting with possession of all or part of the flat.
Conclusion
4.1 No-one should attempt to use their property for short-term lettings etc. without taking specialist legal advice.
4.2 The consequences of doing so can be serious and expensive in terms of legal costs, as well as other potential consequences such as the calling in of a mortgage or the failure of an insurance claim.
Andrew Francis.
Serle Court.
15th September 2025.
© Andrew Francis 2025.
Please note:
This paper does not give legal advice. No legal relationship is created between the author and any reader of it, whether published in whole or in part and in any medium.