Holiday lets may promise easy returns, but restrictive covenants can swiftly scupper plans. Writing in NLJ this week, Andrew Francis of Serle Court recounts how covenants limiting use to a ‘private dwelling house’ or ‘private residence’ have repeatedly defeated short-term letting schemes
Cases from Caradon to Triplerose confirm that Airbnb-style occupation can breach user and ‘no business’ covenants, with injunctions the prima facie remedy. The ‘threat of enforcement is often underestimated’, and negotiating damages may reflect a share of the unlawful gain.
Advisers must scrutinise title at the pre-contract stage and consider indemnity insurance, negotiated releases or s 84 Law of Property Act applications. Entering the short-let market without checking covenants is a legal gamble.
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