We regularly face the question what a PDH is, what the effect of a restriction on the use of a property is; does the term include flats; does it capture holiday lets such as AirBNB?
The potential interpretation is quite wide in context. Case law has established that (broadly) “dwellinghouse” could include a self-contained flat, but the term must always be considered in context.
It is worthwhile distinguishing between:
- “dwellinghouse”
- “private dwellinghouse” and
- “single private dwellinghouse”
The Court determined that the use of a house for persons in care was a breach of a covenant to use premises as a "private dwelling house” but potentially that would not have been the case had it been restricted to use as a "dwelling house".
Use of the words "single" and "private" appears to restrict multiple occupation. However: the courts found that a house let to students did not breach the covenant not to use the property "other than as a single private dwelling house” since the property was used as a permanent residence by four students living as a single social unit. The High Court found that a covenant not to use a property other than as a private dwellinghouse is not the same as requiring the owner to live there personally and not to let the building. This appears to dispel the common assumption that a covenant prohibiting use other than as a “single private dwellinghouse” also prohibits the letting of a property.
It was also found that "a" private dwelling house in the particular facts could easily refer to the presence and use of more than one dwelling house.
What about holiday lets?
A tenant covenant in a long residential lease was considered in the Upper Tribunal:
"Not at any time to carry on or permit to be carried on upon the Property any trade or business whatsoever nor to use or permit the same to be used for any purpose other than as a private dwelling house for occupation by one family at any one time." The tenant advertised on the Airbnb and Booking.com websites as "available to let for short-term occupation".
It was decided that the correct approach to determine whether the provision of serviced accommodation on a commercial basis, fell foul of the covenant to use "as a private dwelling house" was to ask whether the use of the flat by the occupier for the time being was "as a private dwelling house". It was not sufficient that when T was in occupation, T used the flat as a private dwelling house. Case law demonstrated that the use of residential property for short-term occupation by a succession of paying guests is a breach of a covenant requiring use only as a private residence or dwelling house.
The decision is consistent with a developing line of case law that short-term residential occupation by a succession of paying guests sourced through internet booking agencies is a breach of a covenant not to use, other than as a private dwelling house. It is also a useful analysis of whether short-term residential lettings constitute the carrying on of a business.
It was found that use as holiday lets, did not breach the covenant not to carry on any trade of business in itself. There is a distinction between carrying on business in a flat and using a flat for short-term residential purposes, albeit as part of a business. No activity was carried on at the property which in itself amounted to a business. The decision is consistent with a developing line of case law that short-term residential occupation by a succession of paying guests sourced through internet booking agencies is a breach of a covenant not to use, other than as a private dwelling house
The lesson appears to be to carefully consider what the intention of a restriction on use is, and to draft accordingly.
