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Airbnb and Assured Shorthold Tenancies: What can a landlord do?

Airbnb and Assured Shorthold Tenancies: What can a landlord do?

Since being founded in 2008, Airbnb has gone from the complete unknown to having hosted roughly 400 million guests worldwide.

Surprisingly a year after its launch, the company was struggling to break-even but now has 31 offices and is estimated to have more than 5 million listings worldwide. Airbnb offers an alternative to the expensive hotels, especially in tourist hotspots. This platform of quickly renting your room or property out gives homeowners, and tenants alike, the opportunity to make some extra cash by hosting on Airbnb. Surely there is no issue with this? Think again.

What are the risks of Airbnb hosting?

Tenants can become immediately in breach of their tenancy agreement, especially if the landlord has not given prior consent for the property to be sublet. Landlords also risk being in breach of the terms of their head lease if renting a leasehold property. Furthermore, listing a property on Airbnb can result in breaches of planning law and may breach planning permission. Having a tenant hosting on Airbnb can also open landlords up to potentially invalidating insurance policies and also breaching the terms of their mortgagee’s consent to rent the property.

It’s fair to say that a landlord will be unhappy if they find out that their tenant is hosting the property on Airbnb. It is not uncommon, especially in cities like London, Birmingham and Manchester for those properties in the best locations to collect surplus of £100 per night. Any money earned from using Airbnb will doubtless exceed the daily rate of the rent that the landlord is receiving. Arguably, this is unjust enrichment as the tenant can be making a profit from the tenancy agreement at the expense of the landlord.

What can you do if your tenant is subletting on Airbnb?

On the ARLA legal helpline, it is not uncommon for us to be given the scenario that the tenant is subletting on Airbnb with agents or landlords looking to stop the tenant doing this or bring the agreement to an end.

Talk to your tenant

In the first instance, opening a line of communication with the tenant and asking them to take the listing down can bring about a quick and amicable solution. Tenants may be completely unaware that by hosting Airbnb, they are actually in breach of their tenancy agreement and will be completely understanding and co-operative. Some tenants may not be so understanding, and may rent the property on Airbnb with the sole intention to make some quick cash.

Section 21

If having a chat with the tenant and asking them to take the listing down proves unsuccessful, the landlord should consider serving notice on the tenant. A Section 21 notice, if available, may be served in order to bring the tenancy to an end, and then the property can be re-let to a new tenant. Section 21 notices however can be quite a harsh approach especially, if save for listing on Airbnb, the tenant is a good tenant. Furthermore, as the Government are considering abolishing Section 21 notices, this may not be an option in the future.

Section 8

In the alternative, a landlord should consider serving a Section 8 notice on discretionary grounds. The best grounds to use are ground 12 for the breach of the contract, and also consider ground 14. Ground 14 could be used, as it is not unforeseeable that, if a property is being used by Airbnb, the constant flow of people in and out of the property and potential for a guest to have parties until the early hours would be expected to cause a nuisance to the neighbouring properties. Ground 12, of course encompasses any breach of the tenancy. Listing a property on Airbnb is assigning the property to someone else, or sub-letting which will likely breach most private tenancy agreements, especially without the consent of the landlord.

Possession Proceedings

If the Section 8 notice does not work as a deterrent and the property remains on Airbnb, the next step is to proceed to Court and issue possession proceedings. As the claim will be on discretionary grounds – evidence is vital. It’s recommended that as soon as you become aware the property is on Airbnb, collect as much evidence as possible. Take screenshots of the listing, reviews and also who is hosting the property. It may be the case that someone completely different to that named on your tenancy agreement has listed the property. As well as screenshots, ask neighbours for supporting witness statements and, if renting in a block of flats in a city, perhaps CCTV evidence or taking a statement from the concierge service will go a long way to helping your case. Ultimately the decision will be at the discretion of the Court, but with extensive evidence it is likely the decision will go in your favour.

It may also be worth considering that a Court could deem the agreement as something other than an AST, especially if the named tenant never lives or lived in the property as their principal home. Consider also serving a notice to quit or letter of forfeiture in order to cover all bases.

 

What on the face of it may seem a harmless quick way of earning a bit of extra cash can clearly cause major headaches for landlords and agents alike. Be aware and prepared to react quickly so as to avoid voiding your insurance, breaching a head lease or also voiding your lenders consent to rent the property. Private landlords aren’t the only ones taking action, Westminster City Council have just recently fined a Council tenant £100,000 for hosting their property on Airbnb. I expect this is an issue that won’t be going away any time soon…

To speak to a member of our Landlord and Tenant team about any residential lettings matters, you can contact them by phone on 023 8022 1344 or by email at contact@duttongregory.co.uk.