Let The Games Begin: Short-term accommodation and the law

In the UK, the short-letting business really came to the fore with the London Olympics

Airbnb claimed that the London Olympics in 2012 changed the way people planned their trips and provided a great source of income for the local population. As the 2016 Games kick off in Rio, Jason Hunter looks at the legal implications of this type of rental arrangement, and the wider property issues at play…

Every year for decades in the run up to and during Wimbledon some residents would let their homes to those in the tennis fraternity. Others would be so concerned about disruption to their lives, that they would let their homes simply to be away from the crowds.

In recent years, sourcing and renting short-term accommodation around major sporting events has become a major business. There are battalions of potential customers: participants, spectators, media professionals, members of the relevant sporting committees and so on, all of whom need accommodation, expect it to be local and want it to be of a suitable quality and with lots of services. The same is now often true in relation to holiday-makers.

In the UK, the short-letting business really came to the fore with the London Olympics. Airbnb was founded in 2008 in the USA. Perfect timing for the 2012 event. Many property owners took advantage of the easy-to-use property “dating” agency which is essentially what Airbnb is. So successful has the model been, there are an increasing number of competitors coming to that market.

But it is not always plain sailing. As it happens, there were planning law restrictions on short-lets in London. Not many realised that, partly because the rules were applied in different ways by different local authorities. With a change in the law in 2015, those restrictions have probably been lifted, although how the changes in fact operate is not quite straightforward.

Many of the properties available on the short-letting accommodation sites are flats. In pretty much every case, a flat owner owns the flat under a lease which sets out the rules by which the relationship of landlord and tenant is defined. Often the leases contain prohibitions on sub-letting a flat without prior consent. Flat owners regularly overlook that.

In relation to a development we recently advised on, the developer amended the rules in the lease to make it clear short lets were specifically prohibited

Frequently leases contain provisions about how owners and occupiers are to use the flat or the building, the idea to reduce disturbance and damage – the buildings being multi-occupied. In relation to a development we recently advised on, the developer amended the rules in the lease to make it clear short lets were specifically prohibited. There are regular complaints by owner/occupiers that short-letters have mis-used the property, have caused far too much noise, or have compromised the security of the building by leaving communal doors unlocked. All of this occurred in another case we recently advised on relating to a building in Central London. In these cases, flat owners have exposed themselves to complaints by their own landlord that they are in breach of their lease. More and more, landlords are taking enforcement action. In such cases, the flat owners are regularly threatened with repossession of their valuable flat.

Sites like Airbnb make it clear in their terms and conditions that owners should make sure they only offer their property if they comply with the local city and landlord and tenant laws and the regulations that apply to their buildings. Quite right, but it seems the provisions are frequently ignored. In truth, by the time someone comes to take enforcement action, the letting has come to an end. But some owners are habitually using the sites to rent their property. In those cases, enforcement is more likely. Indeed, habitual lettings may amount to a change of planning use, which could lead to a different type of enforcement.

London is a busy, successful and multi-cultural city. It needs to be able to provide accommodation of all types to its visitors. That is why the short-lets planning restrictions were eased. Notwithstanding the headaches they can cause or perhaps the loss of business to letting agents or hotels, it is unlikely short-lets are going to be prohibited as a matter of policy. They are probably here to stay, but one still needs to take care that one can legally enter into short-lettings.

Jason Hunter is a Partner and Head of Property Litigation at Russell-Cooke LLP

2012 London Olympics Closing Ceremony by Cloudzilla (CC-BY-SA-2.0)