Renting out your property as a holiday let may seem like a good way to make some extra money. Yet this could lead to legal action resulting from a breach of your restrictive covenant for residential use.

What falls within the scope of “residential use”?

A common restrictive covenant over the use of a property is as follows:

“Not to use the Property or any part thereof for any purpose other than that for residential use and purposes ancillary thereto…”

A residential building is designed as a dwelling or intended to be used solely for a residential purpose. Such residential purposes include care homes, hospices and buildings used as the sole or main residence of at least 90% of its residents. This does not include prisons or hospitals.

Common law position

In Uratemp Ventures Ltd v Collins [2002] 1 All ER 46 the House of Lords determined a dwelling to mean a place somebody dwells in and treats it as their home.

Additionally, the Court of Appeal in Caradon District Council v Paton and Bussell (2001) CA 33 HLR 34 highlighted the importance of a degree of permanence and an intention to treat the place as a home: “use of a property for short term holiday lettings for periods of one or two weeks was not use as a private dwelling house as it lacked any degree of permanence. Nor could it be said that the holidaymakers intended to treat the property as home, even for a relatively short period of time”.

In Walker v Kenny [2008] EWHC 370 the Court clarified “The expression “residential flats” referred to flats that the occupier would regard as their residence, which would not be a natural description of a holiday apartment.”

Does this restrict you from using your property as a holiday-let?

If such a restrictive covenant applies to the use of your property for residential purposes only, you will be restricted from renting it out as a holiday-let.

The Upper Tribunal in Nemcova v Fairfield Rents Ltd [2016] UKUT 303 found that a restrictive covenant within a residential lease prohibiting use other than as a private residence was breached when the tenant granted short-terms lettings. This decision should be considered before a tenant goes ahead and advertises their property on websites such as Airbnb.

This was confirmed is the case of Triplerose Ltd v Beattie and another [2020] UKUT 180, where the Upper Tribunal determined a restrictive covenant for use other than as a private dwelling for occupation by one family at one time was breached when the tenants advertised the property on Airbnb and Booking.com as “available to let for short-term occupation”.

Consequences of breach

A genuine breach of a freehold or leasehold restrictive covenant could result in legal action being brought against you for the recovery of damages. Additionally, an injunction to bring the breach to an end could be pursued.

Such a breach of leasehold covenant could also result in forfeiture of the lease.

If you breached a restrictive covenant over 12 months ago but no enforcement action was taken, restrictive covenant insurance may be possible to cover action arising in the future.

If you think you have breached a restrictive covenant, you should seek legal advice.

About the Author

Darci Martin

Darci Martin

Trainee Solicitor