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A flat owner in Enfield, North London who let out her flat has recently lost her case before the country’s highest property court, the Upper Tribunal’s Land Division. The decision means that millions of leaseholders could now be affected.

Iveta Nemcova's, an interior designer from Slovakia rented out her flat through Airbnb. Neighbours were concerned about strangers regularly staying in her one bedroom, first floor flat, and asked the block's freeholder to take action.

The property’s leasehold contract stated that the property was a “private residence” only and so could not be rented out for short periods. The private residence clause is a common feature of leases, with around four million people living under them in the UK.

Mrs Nemcova admitted making short term lettings of the flat and advertising its availability. She gave evidence stating that she paid the council tax and utilities and that the flat remained her main residence although it had recently remained empty for 75% of the year as she felt intimidated by her neighbours.

The Court held that use as a short term let would not count as using the property as a private residence and so would constitute a breach of her lease. The test is the duration of the relevant occupation in that it has to have a degree of permanence so the occupier needs to reside in the property for more than a weekend or a few nights a week.

The popularity of sites such as Airbnb and spare room, which enables you to offer paying guests temporary accommodation in your home for short periods, has risen sharply in recent years, and in his March budget the chancellor announced that the first ￡1,000 of income earned in this way will be tax free from April 2017. 

Although the Courts ruling does not affect people who rent out rooms whilst they are also in occupation, it is likely to affect the thousands who rent out whole properties on services like Airbnb.

Apart from the lease, other things that should be checked are your mortgage terms and conditions, ensuring that these are not breached by subletting part or the whole property. Tenants also need to check whether subletting would make their property into a House in Multiple Occupation (HMO) which is a property where at least five people live in more than one household over three or more storeys. A landlord who sublets without a valid HMO licence could be fined up to ￡20,000.00 by the local authority. Some home insurance companies also require a business policy to be taken out where there is subletting. Failing to check your policy risk invalidating your insurance entirely. Properties let out for more than 90 nights a year might also need planning permission, meaning home owners could also be breaching planning laws.