A growing part of the population now earn extra income from letting all or part of their home out using various apps and web platforms. However, some properties, even if you’ve bought them, are still subject to covenants made and given by previous owners. One example of this is that the property ‘shall not be used for any purpose other than as a single private dwellinghouse.’ This article explores what this, and similar types of covenant, might mean for you, and offers some general principles and guidance from how the Courts have interpreted these.
A ‘private dwelling’ is often interpreted by the Courts to mean that whoever occupies the property must use it as their dwelling, i.e. home and not merely occupy it from time to time. Covenants to only use a property as ‘a single private residence’ might therefor be breached by short-term, holiday, or Airbnb-style lettings. The clause might not prohibit longer, sub-letting, for example, a tenancy under an Assured Shorthold Tenancy (AST), if that was going to be the person’s (or family’s) home for the period it is let. You do need to watch out for other clauses in your lease or the covenant about sub-letting which may be present.
In Nemcova v Fairfields Rents Ltd  UKUT 303 (LC) the Upper Tribunal concluded that the use of a flat for short term occupation by guests was a breach of a covenant prohibiting its use ‘other than as a private residence.’
Interestingly, in a covenant not to use buildings on any part of a plot for any other purpose than as a private dwelling house, the word ‘a’ did not necessarily mean ‘one’ private dwelling house, according to the Court of Appeal (Martin v David Wilson Homes Ltd, 28 June 2004 (Buxton and Arden LJJ)  EWCA Civ 1027.) When looking at the literal wording it was also necessary to look at the context.
In Caradon District Council v Fiona Pamela Paton; Caradon District Council v Andrew Arthur George Bussell PLCS 102, there were covenants not to use the properties for any purpose other than as a ‘private dwelling house’ and ‘not to set up or carry out business from the property’. The defendants both used their properties for short term holiday lets and the properties remained empty during the winter.
On appeal, it was held that the concept of a home, and therefore a private dwelling house, required a degree of permanence, together with an intention that the property should be used as a home, even for a short period, rather than for a holiday.
Latham LJ considered that a person who is in a holiday property for a week or two would not describe that as his or her home and therefore the use was in breach of the restrictive covenant.
In Triplerose Ltd v Beattie  UKUT , this case concerned the lease of a property which restricted the use of a flat to ‘any purpose other than as a private dwelling for occupation by one family at any one time,’ and contained additional restrictions that the owner was not to ‘carry on any trade or business upon the property’. In periods they did not reside at the flat, the owners let the property out through online platforms (such as Airbnb and Booking.com). The Court held that short lets were a breach of any covenant, but the Court was not convinced that using the property for short term lettings constituted a breach of the covenant prohibiting trade or business being conducted from the property. A distinction was made between using premises as a business resource and carrying on a business "upon" the premises.
Each covenant will need to be analysed on its own facts. This might include the nature of the property (flat or house), when the covenant was made, and, crucially, the rest of the wording. There is also a far more involved process of reviewing whether covenants are enforceable, or might be modified. Disputes relating to covenants can be complex. Specialist advice should be taken at an early stage.
This article was written by Toby Walker, Head of Dispute Resolution Partner at Allan Janes LLP. Toby and his team deal with cases where parties are seeking to challenge, or fight to uphold, covenants.