Leasehold Restrictive Covenants - Don't Lose Your Home!
The media has reported that an elderly woman is being evicted from her leasehold flat in London after she let it out on Airbnb…and her neighbours complained of noise. She was given six months to sell up and leave.
Don’t fall victim to similar legal pitfalls…
Why Airbnb (and Other Holiday Letting) Can Be A Breach Of Covenant
Holiday lets – whether using Airbnb or traditional methods – have long been a cause of angst when it comes to residential leasehold property.
Subject to the fine wording of the lease, there is plenty of case law confirming that it’s a breach of covenant to turn your home into a holiday let.
Most leases have a clause to the effect that the property is for continuous residential occupation by a single family (not a string of holidaymakers).
There may be other relevant clauses such as one stating that the property should not be used for commercial purposes.
But leaseholders may be unlikely to suffer the wrath of their freeholder/neighbours if they’re simply typing quietly on a laptop in a bedroom office. The ‘commercial use’ clause is more likely to kick in if any business activity becomes a nuisance to others.
Could You Lose Your Home If You Breach a Covenant?
Yes, in theory. Forfeiture of the lease is a very real danger. And it’s commonly the first thing the freeholder will threaten to do – for two reasons:
- It’s a very effective threat. It might sound like a sledgehammer to crack a nut but it works. So freeholders will often have little hesitation in adopting this stance from day one.
- The lease is likely to contain a clause which says the freeholder can charge the leaseholder for some or all of the legal costs involved. (That said, this should be looked at very carefully.)
And in practice it sometimes happens. People can lose their homes – as you have seen from the London case highlighted above.
But in most cases it never happens because the leaseholder has no choice but to follow the covenants they agreed to when they signed the lease. It’s either that or they face losing their home.
Beware These Common Restrictive Covenants
- Residential occupancy – the property is for continuous occupation by one family. This may restrict its use a holiday let.
- Sub-letting – you cannot let the property out to someone else. Also, this may also be a clause in any mortgage conditions.
- Alterations – while it may be okay to refurbish a kitchen or bathroom, such a clause may restrict other alterations such as moving, removing or inserting walls.
- Parking – you may be granted access to only one designated parking space in the communal forecourt. Or – if you have a garage – you may have to use it solely for parking your car.
- Commercial use – you can’t use your residential property for business purposes.
- Nuisance – this typically means being noisy but can cover other forms of nuisance. There may also be a specific clause in the lease banning the playing of musical instruments or doing DIY during certain hours of the day/week.
- Covenants vary from lease to lease and from area to area – even within the same town. As a rule of thumb, they tend to be stricter in high net worth properties.
Find Out More About Residential Leasehold Law
Learn more here about the differences between leasehold and freehold property.
For more information about covenants and other leasehold matters, contact Associate Solicitor Matthew Lewis, Head of Coles Miller’s Residential Leasehold Department, 01202 355697.