Can a tenant list the place that they rent on Airbnb?

Popular homestay network Airbnb has taken the world by storm by allowing guests to enjoy a cheap and authentic experience of their chosen holiday destination through short-term rental arrangements. The company, which describes itself as a peer-to-peer online marketplace, allows home owners to list or rent short-term lodging in residential properties. However, when it comes to tenants wishing to short-term let the premises they are occupying, the circumstances become much more confusing.

What is Airbnb?

Airbnb is a hugely popular accommodation website where home-owners can rent out their homes to others staying in their city. Finding a place to stay on the website is as easy as booking a hotel, with accommodation listed categorised by cost and size. Hosts make money by renting out their homes, while Airbnb charges hosts a small percentage fee that covers the cost of processing payments. The cost of the accommodation varies, and is set by the person who lists the property online.

Case Study: Swan v Uecker (2017) ANZ ConvR 17-056

The circumstances become much more confusing when a tenant wishes to short-let the premises they are occupying. In the recent decision of Swan v Uecker, the applicant owned an apartment in Fitzroy Street, St Kilda which she rented out to the respondents. The respondents rented the apartment on Airbnb for guests to stay for a minimum of three days or a maximum of five days – despite the fact that the lease stipulated that landlord consent was needed before subletting or parting with possession of the apartment.

The applicant applied to the Victorian Civil and Administrative Tribunal for an order terminating the lease on the basis that the tenant had breached the lease by entering into a contract with Airbnb and subsequently accepting ‘guests’ at the property’. At first instance, the court found that the Airbnb guests had a ‘licence’, rather than a ‘sublease’ to occupy the apartment. This meant that there was no breach of the lease as they didn’t need the landlord’s consent. This judgment was based upon the fact that the guests did not have exclusive possession of the premises during their stay.

The Landlord appealed this decision on the basis that the tribunal failed to thoroughly consider some of the more specific details around whether the arrangement was a ‘licence’ or a ‘sublease’. After further consideration, the appeal was granted and the tenant was found to be in breach of the lease. The court reasoned that whilst the stay was only for a short period of time, the occupancy was the same as sublease as guests had exclusive possession of the premises during their stay.

What does this mean for tenants?

Justice Croft was careful to point out that this decision should not be seen as an authority for the proposition that an Airbnb guest will always be held to be a tenant, rather than a licensee. If the rights of the guest fall short of exclusive possession of the leased property then it is safe to say that the guest will have a licence, rather than a lease, both as to form and substance. This would have been the case in Swan if the guest had adopted the option of occupying one room in the property, rather than taking possession of the entire property. It might also have been the case if the Airbnb contract and advertising had have reserved to the tenant the right to access the property at any time during the occupancy of the guest, although the market acceptability of such an arrangement is problematic.

This demonstrates the importance of tenants and landlords examining the relevant provisions of their lease and keeping the possibility of short term letting in mind when signing future leases. We recommend hiring a commercial lawyer with experience in looking at contracts and agreements.

Are you looking for a solicitor in Newcastle to assist you in your legal matter? Please don’t hesitate to contact Butlers Business and Law on (02) 4929 7002 or fill out an enquiry form on our website. We have experience in advising businesses in Newcastle, the Hunter and Sydney.

Image: ‘Rainbow Row’ by Liz West available at Flickr under a Creative Commons Attribution 2.0.