Airbnb & Apartments – Avoid The Pitfalls

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The rise of Airbnb as short-stay accommodation has exploded since the company’s inception in 2008. This online marketplace for people to search and rent short term lodgings has been widely accepted in the now booming gig economy. However as this business grew, so too did the legalities and troubles that plagued Airbnb.


Most recently there have been questions raised about whether apartment owners (landlords) can legally engage in short-term leases with the strata committee disagrees. There are also conversations about the legality of renters (tenants) leasing out the landlords property without their knowledge.   


Strata Puts Their Foot Down


An emerging issue within the gig economy is whether or not higher powers are able to block access to particular services. Since more and more people are living in apartments, these are particularly of relevance with regards to Airbnb. One of these main queries is whether a strata committee can pass a by-law to prevent a property owner within a strata complex leasing out their property to short-term tenants.   


While this can be exceptionally frustrating for the apartment owner (especially when high and mighty strata committees are concerned) legally the NSW strata title legislation prohibits any such restrictions. This means that unless there is a particular issue within the zoning of the area where the property is located you cannot be legally prevented from hosting Airbnb or other short-term tenants.


Due to the amount of accommodation currently in demand in high population areas such as Sydney it is not unreasonable to expect that more investors and landlords will want to make their properties available for short-term leasing. However if you are looking to lease out your property short term, it is advisable to have some paperwork drawn up by a legal professional to protect you from any potential issues.


Leasing without Landlords Knowledge   


According to the 2016 census, 31.4% of Sydneysiders rent. The temptation is there for some tenants to secretly sublet their landlord’s apartments to Airbnb in a campaign to get a bit of extra money on the side. However if a tenant wishes to gamble and run the risk of leasing the landlord’s property they may face heavy fines, or even eviction.


Check Your Lease


Firstly before deciding whether or not you can legally list your landlord’s place on Airbnb it is important to have a good read of your lease. In most cases there will be a clause or provision about the tenant being unable to sublet any or all parts of the property without the landlord’s written consent. If the tenant violates an explicit clause within the lease the landlord has legal ground to evict the tenant.


Some Australian real estate agents are updating their rental leases to specifically include a clause about Airbnb, to stop tenants secretly subletting properties. In these cases the clause can say;


“The tenant must not grant a licence or part via Airbnb or third party with occupation of the premises, or a part of the premises to provide accommodation for a fee or other benefit, without, in each instance, obtaining the landlords prior written consent which, if given, may be subject to reasonable conditions”.


These clauses have been included in more and more leases, as landlords and real estate agents try to protect their investments. Many property managers say that they try to discourage subletting on Airbnb as it does raise a number of security and maintenance issues. Many landlords claim that having a rotating cast of short-term stay individuals can cause undue wear and tear on the apartment.


Screen Your Guests  


One of the most important things for hosts to be doing is diligently screening guests. This is by far the best way to avoid problems that can lead to evictions or problems in your rental. There are many horror stories about people leasing out their apartments and coming home to find their property trashed.


It is good to use common sense with who you are looking to lease to. A middle aged couple who are in town for the weekend are going to be a lot more inconspicuous than a gang of batchelors celebrating their friend getting married. Sometimes if an apartment is particularly raucous, it can attract the attention of neighbours and police. They will then contact your landlord, which will in turn land you in hot water.       


Speak with your Landlord


Most renters who lease out their apartment do so without first speaking with their landlord. This is akin to gambling with their lease. It may work out okay if the guests cause no problems and the neighbours don’t complain, however this is still inherently risky.


Instead of taking this chance, we recommend speaking with your landlord and get their permission prior to listing the apartment. In order to get your landlord to accede you may need to offer a split of the profits, or alternatively you may require your rent to be raised. Your landlord may also allow short term leasing on a very occasional basis (such as if a roommate is moving out / moving in).


Speaking with your landlord about your intentions to lease the apartment on Airbnb is the smart and sensible way to proceed. If your landlord does give permission, make sure to summarize the agreement in writing and send it to a third party such as your real estate agent.


If you have any further queries please don’t hesitate to contact Owen Hodge Lawyers on 1800 770 780.

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