The property industry is an ever changing environment and the issues faced by those who work within the industry evolve on a daily basis. One of the trends that seems to be keeping property agents, particularly property managers and strata managers, on their toes is Airbnb.
The questions that are constantly being asked include:
- Is it legal for my tenant to list their rented premises on Airbnb?
- How do I stop tenants from listing their property?
- What right does an owners corporation have to stop owners and tenants from using Airbnb in our strata scheme?
For those who are not yet aware, in 2008, Airbnb was developed as an app and web-based platform for connecting and co-ordinating the short or long term renting of property.
Rental property owners advertise their properties, stipulating their own personal terms; with accommodation-seekers agreeing to stay in those properties based on those terms. The two parties to an Airbnb exchange must register on the Airbnb website. Airbnb takes a guest service fee of between 6 and 12% every time the reservation is booked.
Growing big and fast
According to a May 2015 report in the Australian Financial Review, “There are now 40,000 listings in Australia on Airbnb…That’s a doubling of listings in the past 12 months.” The article specifically noted that “Sydney was in the top 10 cities for travellers worldwide” for Airbnb. We can only imagine the rise in these figures since 2015.
The policy and legal framework in which Airbnb operates in NSW Short-term holiday rentals in NSW are overseen by councils, and zoning usually determines whether a home can be let out as a holiday rental. However, specific regulations around letting and subletting properties through platforms such as Airbnb are complex (or in many cases undefined) and vary from council to council.
Property managers should be mindful that subletting is not against the Residential Tenancies Act 2010, however there are very clear rules on how a tenant can engage in a sublet of their rented premises. Subletting is where the tenant enters into a formal agreement with somebody else to rent part of the premises or the whole premises to them. In effect, they are taking on the role of landlord for the sub– tenant. The tenant is still responsible for paying the whole of the rent to the landlord.
There is no contractual arrangement between the landlord and the sub–tenant. For example, the sub-tenant would pay their rent to the tenant not to the landlord and would be responsible for the actions of the sub-tenant. There is nothing in the Act that states that a sublet is to be for any particular period of time, be one week or one year, however it is very clear that the landlord must be consulted and give permission for the sublet to occur.
A landlord can refuse the sublet under certain circumstances but the reality is that should a tenant decide to let a room or the whole premises through Airbnb, they are not likely to be consulting the property manager and landlord for permission to do so, which makes regulating the problem a difficult task for property managers that are ultimately faced with the issue. The first that a property manager often hears of an issue is when a neighbour complains to the agency of the noise, or frequency of movements in and out of the Airbnb property.
Defining the issue
At the same time, the current definition of ‘tourist and visitor accommodation’ typically includes clear commercial activities such as backpacker’s accommodation, bed and breakfast accommodation, farm stay accommodation, hotel and motel accommodation and serviced apartments. This definition is clearly inappropriate for the renting out of the whole or parts of the private residences for infrequent short-duration stays.
While an owners corporation cannot have a by-law that restricts the usage of one’s lot, they must be mindful that as a whole strata scheme they may be in breach of a great deal of strata regulations with their local council should lots be used for Airbnb, and as such would need to investigate what options they have as an owners corporation to minimise breaches of legislation.
So, for property managers, remind your tenants that sub-leasing is not permitted unless approved in writing and for strata managers, check with your relevant council for the approvals regarding short-duration stays in each complex that you manage.
Rosy Sullivan is the Founding Director and College Principal at Australian College of Professionals, EAC's training partner.