Holiday Lettings – Common Restrictive Covenants in the South Hams
Around 3.4 million UK citizens have additional properties that they leave empty as an investment or use as holiday homes. In the South West, we have a much higher proportion of second or holiday homes, particularly in South Hams hotspots such as Salcombe, East Portlemouth and Dartmouth.
Owners naturally wish to maximise the return from holiday homes by letting them through the various holiday letting agencies operating in Salcombe and Dartmouth.
However, many properties in these areas, particularly leasehold and former local authority properties are subject to restrictive covenants which might prevent the use of properties in this way. One restriction that we see regularly has wording along the lines that the owner agrees:
“not to use the property other than for private residential purposes”
It is almost 2 decades since the Court of Appeal considered a clause in a right to buy lease, not to use the property “for any purpose other than that of a private dwelling house.”
The case is Caradon District Council v Paton & Bussell (2001) CA 33 HLR 34.
The property was used for short let holidays and the Court of Appeal found that such use was a breach of covenant. There are numerous leasehold properties in Salcombe which are subject to a similar restriction. In order to overcome this problem many property owners have entered in to deeds of variation with the freeholder and their follow leaseholders in in order to allow holiday lettings. It is important to ensure that all leases have the same variation since one leaseholder could potentially object and prevent the variation which is what happened in the recent case of Duval v 11-13 Randolph Crescent Ltd [2018] EWCA Civ 2298.
Similar issue can arise with the increasingly common use of AirBNB to let properties. This was considered in the recent case of Nemcova v Fairfield Rents Ltd (2016) UKUT 303 (LC) concerning a flat in Enfield. In this case the court addressed the following problem:
“a long lease contains a covenant not to use the demise premises…… for any purpose whatsoever other than as a private residence. If the leaseholder advertises on the Internet the availability of the flat for short-term lettings and grants a series of such lettings, do the leaseholder’s actions breach of the covenant?”
The Judge took the view that granting very short-term lettings of the flat did indeed breach the covenant.
So before an owner thinks of short letting a property whether for holiday rentals or AirBNB it is essential to check that there are no restrictions on doing so in the title. There are further issues in doing so also relating to breach of mortgage condition, breach of planning condition, invalidation of buildings insurance and potential breach of health and safety legislation and building regulations.
If you have a property which you would like to use for holiday lettings but you are worried about whether there might be anything which would prevent you from doing so, Bartons Property Team can advise you any restrictions you might be subject to and also what options might be available to release you from those restrictions.
Equally, if you think one of your neighbours is entering into holiday lets in breach of a restrictive covenant, our Dispute Resolution Department have experience of advising property owners on the enforcement of these restrictive covenants, including through injunctive proceedings.
About The Author
Raymond Hayes is an author on property law and graduate of London and Oxford Universities, Raymond was formerly a partner with a leading Hong Kong firm. His specialties include investment properties, second homes and high value residential plot sales for developers.
Raymond Hayes
01548 845000
