The popular website has caused controversy around the world as its short lets to strangers’ website, allowing guests to stay in homes as lodgers, has morphed into facilitating more conventional lets.

A Court in London has ruled that flat owners who rent out homes “could be breaking the law” as the judge says “private residences only” cannot be rented out short-term because of common clauses in UK leases, with around four million of these in Britain.

The case mirrors concerns in Airbnb home city, San Francisco, where a San Francisco ordinance sets fines for short-term rental websites that process bookings for lets not pre-registered with the city authorities. Critics in the US have complained that Airbnb’s business model encourages landlords to take already scarce rentals off the rentals market. Similar sentiments are now being expressed in London.

The London ruling could be a blow to holiday home renting on sites such as Airbnb following an Upper Tribunal’s Land Chamber case against designer Iveta Nemcova’s Enfield flat.

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Homeowners whose leases state their properties can be used “as a private residence only” cannot rent out their homes short-term, the country’s highest property court ruling decrees, “depending on the conditions of their lease.”

The ruling is a body blow to Airbnb, as it means thousands of their “hosts” could be renting their homes in breach of the law. Also, is comes as the American company fights claims that it is pushing up UK house prices by enabling landlords to turn residential homes into unregistered “pseudo-hotels”, and it allows bogus letting agents “renting” through Airbnb to fleece would-be tenants.

Slovakian leaseholder, interior designer and property developer Iveta Nemcova, fell out with neighbours at a riverside housing development in Enfield, north London who had become concerned about strangers constantly visiting and staying in the one bedroom, first floor flat.

The freeholders became involved in the dispute and took Ms Nemcova to the property tribunal where she admitted renting out her property on the Airbnb, TripAdvisor and holidaylettings.com websites – as well as on her own lettings site.

Nemcova argued that she had remained within her lease’s “private residence use” clause because she paid the flat’s council tax and bills and because she stayed there “three or four days a week” and said her lease contained no explicit bar on her charging people to stay in her flat short-term while she wasn’t staying there.

However, Judge Stuart Bridge in the Upper Tribunal’s Land Division, disagreed.

“In order for a property to be used as the occupier’s private residence, there must be a degree of permanence going beyond being there for a weekend or a few nights in the week; granting very short term lettings (days and weeks rather than months)… necessarily breaches the covenant, “not to use the property as anything other than a private residence,” he said.

A spokesman for Airbnb has said:

“We remind all hosts to check and follow local rules before they list their space. This is also made clear on our responsible hosting page, which contains useful information and resources on the rules for home sharing.”

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