Ben Reeve Lewis takes a look at holiday lets
Working in rogue landlord enforcement you see trends in behaviours. For a while now its been the old scam of…..
Give them a lodger agreement even though I don’t live in the property
Been around for ages that one but becoming increasingly popular in the last 5 years.
Coming up the home straight at the moment is the “Give them a holiday let” scam.
Gaining popularity with agents probably as a result in the AirBnb publicity, said agents being attracted to the prospect of no need to protect deposits or get possession orders to evict and probably avoiding the Immigration Act right to rent, although I could be wrong on the latter [you only need to right to rent check holiday occupiers if they are staying for more than three months – Ed].
True holiday lets, even if they are tenancies, are treated differently under the law and the holiday occupiers do not have the same rights.
Despicable landlords exploiting the holiday letting law
One crew of jokers I’m involved with carry out monthly visits to an outbuilding behind a shop where a family have been living for 2 years and give them a fresh 30 day holiday letting agreement. They have a stack of them now.
This week I was dealing with a more upmarket crew running what appears to be a normal business based on the holiday let market but finding themselves, in their enthusiasm, running afoul of a range of legal issues and possibly setting themselves up for some expensive problems.
So what actually constitutes a holiday let then?
Well, the first thing to understand is that there doesn’t have to be seaside rock involved. People can have holidays anywhere. I was watching some documentary the other night about extreme holidays where one guy went to Chernobyl and another went to Kabul.
Even Bognor would be preferable in my book.
Holiday let v Employment let
London is obviously a massive international holiday destination so the prospect certainly exists for holiday lets there.
What about the very descriptor “Holiday let” as distinct from say an “Employment let”? (Yes I know that doesn’t exist by that name) Surely if something has such a description then the letting arrangement should indeed be for a ‘Holiday’ as opposed to something else.
A question that has vexed the courts on occasion. In the case of Buchmann v. May (1978) where a dispute arose of an Antipodean couple travelling around, living and working on short-term visas the issue of the actual use of the property came up as key.
The court of appeal finding that if a property is to be a holiday let then a holiday is what it should be being used for. They cited the Oxford English Dictionary definition of a holiday as being
“A period of cessation of work, or period of recreation”
as being entirely appropriate.
So what about a working holiday?
Jump forward a year to the case of McHale v. Daneham (1979) and we see the logic of Buchmann extended when the courts decided that there was no reason why our understanding of a holiday should not also include the prospect of a ‘working holiday’, as long as it was still a holiday.
Can you see how the courts are focussing on that word?
The notion of the basis of occupation being to support a holiday does not budge an inch. A holiday let isn’t a normal tenancy so if you are going to rent out a holiday let then you need to be damn sure that this is the intention of the occupant and the facts of the occupancy.
In other words, what are the people living in the property really doing?
Put into practice…….
Imagine a scenario where Jose travels to London from Spain to work for the summer in a Soho bar before returning to Spain to start a University course. A working holiday? Yep sounds consistent with McHale but what happens if Jose is so struck by London life and is so good at bar work that his boss offers him a permanent job and he decides to stay?
Then he is no longer occupying for the purposes of a holiday, working or otherwise.
However, what if he merely deferred the Uni course for a year, fully intending to return to Spain in 12 months time. Would the court still see this as a working holiday?
I couldn’t find any case law on that aspect. If anyone can find one then please post in the comments.
Student nurses have been targets too
Sticking with the court’s tight focus on the term ‘Holiday’ we have the case of R v. Rent Officer for Camden LBC ex p Plant (1980) concerning a bunch of student nurses signing a holiday let agreement whilst studying and working at the local teaching hospital.
The courts commenting that the label put on the written agreement is not conclusive and that they should
“Go on and consider other evidence to see whether the written agreement represents the reality of the situation”.
The courts deciding a tenancy was in place and that the label ‘Holiday let’ was entirely misleading.
A spade’s a spade…..or is it?
Back to good old Street v. Mountford and Judge Templeman’s famous comments about a spade being a spade, regardless of whether the landlord chose to call it a fork.
So there is the fly in the ointment when it comes to renting holiday lets as a business model. As with all lettings agreements calling it something does not make it what you say it is and in the case of holiday lets the intentions of the parties and the factual circumstances are far more determinative.
You could have a shared house of 5 different lets where some could be occupying under normal tenancies whilst others in the same house were indeed holiday lets.
A final caveat to be aware of
The last issue that the would be professional holiday-letter needs to be aware of ( in addition to the different tax requirements) are the strict planning laws on short term lets, lengthened to 90 days in a year by the Deregulation Act 2015 but carrying a heavy penalty for breaches.
No London boroughs I know of will grant planning permission for short term lets over this time period because of the capital’s parlous shortage of normal accommodation for its citizens.
AirBnb’s business model may need addressing….
A thorn under the skin of AirBnb’s business model that they have conceded needs addressing through their system checks.
Agents and landlords may become enthusiastic, even messianic about this possible business model, viewing it as a win-win for people not looking to stay in one place for long and providing the avoidance of a range of annoying legislative requirements but if you get it wrong, you might find little things like deposit protection rules and possession orders were a preferable alternative.
Many years ago I read an article (probably in “Private Eye”) which said that the law hates people who are too clever for their own good. A good rule of thumb is to assume (even if it is not the case) that loopholes are only spotted by lawyers. If you think you have found a way to get round some statutory protection you will probably come a cropper.
The question I always start with is – if the occupier is here for a ‘holiday’ – where do they live? Thinking about s.1 HA 88, if they can provide an alternative address which is their main/principal home, then it won’t be an AST and the holiday let ‘sham’ could be plausible. There’s a range of other factors though as you point out. It is one that seems to keep coming up.