Holiday Lets – pay close attention to covenants
With landlords having just finished scrabbling to buy before the introduction of the new Stamp Duty Land Tax rates on second homes, they may face a possible minefield should they have purchased with short term holiday lets in mind.
When purchasing a property it is important to pay close attention to covenants. These are legally binding restrictions that have been entered into by landowners and put on the title deeds. This means they pass with the ownership of the property rather than attaching to the person who created them. Notably they continue to have effect even after many years have passed and they appear to be redundant. Failure to observe these covenants can result in an injunction against you and/or damages being awarded. One such common covenant is “not to use or permit to be used the property for any purpose other than that of a private dwelling house”.
In Caradon District Council v Paton and another the owner of the property rented it to people, typically for one or two weeks at a time, as a holiday home. The council brought proceedings against the landlords for breach of covenant – to only use the property as a private dwelling house.
Despite the landlords arguments to the contrary, the Court of Appeal held that the house was not being used as a private dwelling house. The judges reasoned that someone letting a holiday home for a week or two would not think of it as their home so it could not be being used as a private dwelling house. On the contrary, they would be leaving their home to stay there.
An injunction was passed prohibiting the use of the property for holiday lets.
To discuss how restrictive covenants may affect the use of your property please contact our Property team on 0345 20 73 72 8 or email firstname.lastname@example.org