When Anthony Dunkley traveled to Margate, Kent, earlier this year, he hoped to purchase a home that he could use occasionally and rent out on Airbnb the other times. After submitting offers on three apartments, he met the same issue on each occasion: the lease did not permit it.
While estate brokers had informed him that he could rent out the properties for days, weekends, and weeks, the documentation stated otherwise.
Similar to the leases on many residences across the nation, there were restrictions on how they could and could not be utilized. In addition, short-term rentals were prohibited.
He had encountered a situation that many homeowners who rent out their homes for short periods may not be aware of.
Frequently, leases contain restrictive conditions, such as prohibiting the property from being rented out for less than six months or limiting its usage to a single family.
And renting them in violation of these regulations increases the danger of legal action.
“Approximately seventy-five percent of the time, I was informed that it was rentable, and after nine weeks of hunting, we made three offers. Before wasting money on attorneys, I requested a copy of the lease, and each time it was made quite clear that subletting was not permitted,” recalls Dunkley, an English native residing in Italy and Portugal.
“The reasons why real estate brokers would say ‘yes’ were false. There were statements such as “the previous tenant did it” and “it’s a basement apartment, so that’s not a problem, and it has a separate entrance.”
These were deemed sufficient grounds for believing that the property might be listed on Airbnb.
Even though leaseholders may own their own home or apartment, the agreement they have with the landlord or freeholder often specifies the permitted uses.
A management business could represent the freeholder in the instance of an apartment complex. Short-term rentals may breach terms that restrict their use to that of a residential house.
According to Chris Waters, managing partner of Meaby & Co Solicitors, there are several cases in which people assume they have the legal right to rent their property on short-term websites when they do not.
“The beginning point for whether you are permitted to rent a leasehold property as a short-term let – anything less than six months – will be set by the lease if you own a leasehold property.
“It would be incorrect for me to state that the vast majority of leases limit or restrict short-term rentals, but many do,” he says.
The issue is especially significant in cities, where leasehold homes are far more prevalent than in suburbs.
“I do not believe that it is a well-known feature, and I believe that those who are aware of it tend to disregard it and hope for the best.”
Some leases ban short-term tenancies, but others may only enable tenancies of six months or more.
Even though there is no express limitation against short-term rentals, according to Waters, the property cannot be rented out.
Potentially severe penalties can result from a tenant’s violation of the lease terms. This might range from notice to stop violating the lease to court proceedings to forfeit the lease, which “essentially terminates the lease and results in the loss of the property,” explains Waters.
According to Jeremy Weaver, an attorney with Brady Solicitors in Nottingham, the growth of short-term leasing services has led to an increase in inquiries concerning lease violations.
“In my experience, these matters rarely end up in court, although there have been some significant court rulings on the issue of short-term rentals,” he says.
According to the instances that have been ruled, the majority of modern leases will likely contain terms that constitute a breach of contract.
Weaver recently handled a case involving a leaseholder who routinely rented out their unit on a short-term basis, resulting in disturbances to other occupants in a city-center building and subsequent court action.
“I assume that in many instances, though not all, lessees are unaware that their actions may constitute a lease violation,” he says. “The best suggestion I can give is to review the lease and, if necessary, either consult the landlord/management company/managing agent or seek legal counsel.”
“Unfortunately, it is not always simple for a layperson to determine whether a contract prohibits short-term leasing.”
Airbnb, the most likely dominant player in the industry, declined to comment. On its “responsible hosting” page, it states that leases may contain limits on subletting or hosting and encourages owners to study the governing contracts. It states that it may take “necessary measures” in the event of a dispute, which could include deactivating the listing.
