Using booking platforms such as Airbnb and Stayz, property owners can offer private rooms or homes to visitors as an alternative to hotels.
Short-stay rentals take many forms: There are executive leases – usually for a minimum term of seven days, managed by a rental manager.
There is Airbnb or Stayz – for short stays on a per room basis like a B & B (Bed and Breakfast) or on a whole house basis, managed by an owner. There are holiday rentals managed by a holiday apartment manager or by an owner.
What are the legal rules around short-stay rentals in private dwellings?
• The Local Council Planning requirements must be followed. If the short-stay rental is a considered a business activity – a B & B or tourist accommodation – then council approval is necessary. Moves are afoot to declare up to 100 nights per year is non-business, and more than 100 nights is a business activity which requires approval.
• A number of strata owners corporations, particularly in the newer high rise apartment towers, have strata by-Laws which prohibit short-stay rentals. Sadly, those strata by-laws are not worth the paper they are written upon because they cut across the Strata Law which outlaws any and all restrictions on renting out a strata apartment. The Strata Law was recently applied by the Supreme Court of Victoria which upheld the rights of an executive leasing company to provide short-stay rentals despite a Strata By-Law prohibiting it.
• Most short-stay visitors make little noise. It is the occasional loud music playing well into the night in party houses that causes complaints. Noise control is a matter for the Local Council which enforces laws limiting excessive noise at night. A Strata Owners Corporation can make Strata By-Laws about noise disturbance, and the behavior of visitors, as many already do with their Pool Rules.
• Damage to the house or apartment, over and above wear and tear, is an inherent risk in short-stay rentals. Insurance cover is available for short-stay rentals, which is good for major damage. Airbnb extends insurance to cover major damage – over $10,000. Minor damage is at the owner’s risk because the excess payable to make a claim often makes it not worthwhile to make an insurance claim.
• Owners can have short-stay rentals, but tenants cannot unless they have consent to sub-let from the owner. The Supreme Court of Victoria recently upheld the landlord’s termination of a lease because the tenant had used the apartment as an Airbnb, without the landlord’s consent. The Court rejected the tenant’s argument that the landlord was unreasonable in refusing consent to sub-let as an Airbnb, because of the potential damage to the property.
• Is a short-stay rental a residential lease? The answer is no, because tenancies for three months or less are excluded from the Residential Tenancy Law.
• Who apart from the visitor is responsible if the short-stay tenant leaves the property in a mess, or worse still damages the property? If the owner uses a rental manager, an online booking service or a holiday letting agency, then it is their responsibility to use ‘due care and skill’ in vetting the short-stay tenant. Provided mangers and agencies carry out background checks, online services such as Airbnb carry out host reviews and tenant reviews, they avoid responsibility. And so, the responsibility falls upon the owner, to recoup the cost from the security bond.
The legal rules are under review. Changes can be expected as a result of the NSW Parliamentary Enquiry upon Short-stay Holiday letting. In Victoria, changes to Strata Laws are being passed to give owners corporations more power to control noise, to recover damage caused to the common property from short-stay rentals, and to ban repeat offenders from renting out their apartment for short-stays. In Queensland, limits on using Gold Coast apartments to all-weekend parties are being introduced.
There is more to be done, such as to require on-line sort-stay booking services to prominently display a warning to visitors in their booking form against making excessive noise (especially in strata apartments), to respect the neighborhood, and to not leave a mess or cause damage.
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