Holiday lettings in the UK this year are in demand as the UK emerges from lockdown into warmer weather and with foreign travel looking unlikely this year for most.

Avoiding the many pitfalls surrounding holiday lettings

This is the first article in a two-part review of the legal issues with holiday lets, with tips to avoid the many pitfalls.

In this part we review the security of tenure applicable to holiday lets, how to avoid an unintended grant of rights and what to do when a holiday guest refuses to pack their suitcase.

The second part reviews the restrictions on owners renting out properties for short-term lets with a particular focus on covenants in long leases.

Protecting holiday homes in England & Wales

Genuine holiday lettings understandably benefit from exclusions from security of tenure. There are, though, holidaymakers who unexpectedly claim that they have acquired rights under the Housing Act.

Recent national press reports tell of difficulties for one Gloucestershire holiday home owner in evicting a guest who refuses to leave or pay rent. He claims to be a tenant after first being granted permission to stay at the property for two weeks. The owner’s plans to spend summer in her holiday home are on hold whilst she awaits the expiry of a 6 month notice before commencing a claim.

It’s not just tenants who attempt to exploit ambiguities in the law concerning holiday lets. A new breed of rogue landlord is reported to be on the rise in London. They seek to avoid deposit protections and the need for possession proceedings by inducing occupiers to enter into holiday licence agreements instead of AST agreements. The numbers of landlords adopting such tactics are likely to be a reaction to lengthy delays in residential possession claims as the courts work through a backlog, being short staffed and hampered by COVID-19 restraints, both physical and procedural.

So how do you spot a fake holiday licence or evict a holiday guest? The starting point is to look at how you define a holiday letting as this affects the possession procedure to be followed.

How to define a “holiday letting” in this home working era?

The Coronavirus pandemic has led to the blurring of the lines between leisure and work time. Outside of lockdown many are seeking to leverage the benefits of remote working and Zoom meetings by taking the opportunity to set up a “home office” in holiday homes around the world.

Determining if a let is a holiday let is ultimately in each case a question of fact but here are some factors to consider.

There is no definition of “holiday” in the Housing Act 1988 (“HA 1988”) or any related statute. The main case authority is Buchmann v May [1978] 2 ALL E.R 993 where the broad definition of “holiday” in the Oxford English Dictionary was adopted: “a period of cessation of work, or a period of recreation”. So, any break from work or study to enjoy any leisure pursuits might be caught by the definition.

It is unclear whether you need to refrain from work throughout your stay to qualify as a holiday. S3A(7)(a) Protection from Eviction Act 1977 (“PEA 1977”) states that a tenancy or licence is excluded if “it confers on the tenant or licensee the right to occupy the premises for a holiday only”. The use of the word “only” here suggests that if the guest is using the property partly for work then it does not fall under this exception.

In Buchmann, a term of the agreement defining the purpose of the let as being for a holiday was held to be conclusive evidence that it was a true holiday let unless the guest could discharge the heavy burden of showing that such expressed purpose was false. For example, the landlord knew the occupiers were students. What, though, is the position if the landlord knew that the occupier had brought along his laptop with the intention of keeping on top of his inbox during his holiday?

Duration

A stay of less than three months is more likely to constitute a holiday within the ordinary meaning of the word. The longer the term, the more difficult it will be to claim the purpose is for a holiday. This is supported by the Home Office Code of Practice on Right to Checks which states that bookings of three months or more may indicate that person is not using the property as a holiday let. In Spielplatz limited v Pearson [2015] EWCA Civ 804 the Court of Appeal held the chalet that the Defendants had built and were entitled to occupy all year around for “habitual use” on a naturist resort was not occupied for holiday use.

Somewhere else to call home

To qualify as a holiday let the guest must have an alternative place to call home. When a guest resides at multiple properties, the principal home will be the property where they live their settled day to day life, with personal, legal or family ties to the address. This point is particularly important if a guest asks to stay longer due to moving house/renovation works as the holiday let could then be considered their principal home.

Recovering Possession from Holiday Guests

Different eviction procedures apply depending on whether the occupier is staying for the purposes of a holiday or not. The PEA 1977 makes it unlawful for landlords to evict qualifying residential occupiers without obtaining a court order but holiday lets are excluded. Accordingly, a licensor of a holiday home does not have to obtain a court order and could instead regain possession by self-help means, including changing the locks provided that no violence is used if someone in the property is opposed to the landlord’s entry (s.6 Criminal Law Act 1977). Self-help can be high risk and great care should be taken. Alternatively trespass proceedings can be brought seeking an immediate possession order. Trespasser claims are excluded from Covid-19 procedural changes and in practice appear not to be subject to the same delays in obtaining hearings.

Most holidaymakers staying for a short fixed term will be licensees. If, unusually, the occupier has a tenancy for holiday purposes then it will be excluded from the HA 1988 (Sch 1) and cannot be an Assured or an AST. Rather, it will be a common law tenancy terminable by notice to quit (a much shorter process than serving Housing Act notices).

Recovering possession from a tenant without a court order is high risk as they may claim the term has not expired or a breach of the covenant for quiet enjoyment or harassment.

Recovering possession from non-holiday guests

Complications arise when a genuine holiday licensee starts working. If this occurs, either during or after the fixed term, the fact of having exclusive possession and payment of rent may result in an Assured or AST, no matter what the form of the written agreement (Street v Mountford [1985]). In this situation the HA 1988 and PEA 1977 would apply and the tenancy is terminated by notice under s.8 or s.21 HA 1988.

Currently, the Coronavirus Act 2020 extends the notice period for both s.8 and s.21 notices, save for a few exceptions, to 6 months until the 31 March 2021 and is likely to be extended further.

A final point to note is the useful, but less well-known mandatory ground 3 Sch 2 of the HA 1988. This applies where a property has been let in the last 12 months for holiday purposes, is let afresh for holiday purposes for a term of not more than 8 months and a prior notice is given to the tenant. Unfortunately, if relying on this ground the Coronavirus Act 2020 now requires a 6 month s8 notice and not 2 weeks as before.

Tips for holiday home owners

1. Record in the agreement the use of the property as a holiday let
2. Ensure guest has a principal residence
3. Limit the holiday term to less than 3 months
4. Consider offering services such as cleaning/gardening as this is more akin to a licence arrangement
5. Sign new licence upon renewal upon expiry of fixed term
6. Be wary of relying solely on an intermediary’s terms of engagement

If you experience any issues with your holiday letting please contact one of our Property Litigation experts. Please visit our Landlord and Tenant Disputes page for any other issues.

This article was first published in the Estate Gazette Magazine on the 15 March 2021 – Holiday lets: how to deal with guests who outstay their welcome.