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Airbnb - are the risks worth the income?

It's tempting to turn your spare room into a stream of extra income, and it's pretty easy to do with tools like AirBnB.

Airbnb is it worh the risk?
Renting a room on Airbnb can be a little more complicated than you think.

But don’t jump into this venture lightly because there are serious issues to consider. You don’t want to come unstuck and lose out in the long run, like this unlucky Canadian couple did.

It’s not just the risk of unknowingly letting your home to a group of party hard revellers. You also need to check whether you are even permitted to let your room or entire home on Airbnb.  Doing so may constitute a breach of your rental agreement, strata building rules, or even local government regulations. 

Some unwary tenants have been surprised to find themselves evicted for breach of lease after their landlord discovered they had been renting space in their apartment on Airbnb.

Short term lettings in residential apartments are also a source of angst for strata committees and managers.  Extra traffic of guests in the building may not be covered under strata insurances, and can be disruptive to the peace and quiet enjoyment of neighbouring residents.  In some cases, rooms are booked in residential blocks to host unruly parties, with excessive noise causing nuisance, and party goers leaving communal facilities such as the pool area in disarray.

In certain circumstances, an owners corporation can prohibit short-term rental accommodation from a common property altogether. This course of action is only possible where the lot in question is not a principal place of residence.

If you’ve ever been tempted by the extra cash, here are some issues to consider:-

  • Does your local government allow for homes to be let for short term accommodation?  Some councils expressly prohibit this.  It is the hosts responsibility to comply with the local laws and Airbnb recommends that hosts look up the permitting, zoning, safety and health regulations that may apply.
  • Do taxes or local government fees apply, such as hotel/transient occupancy tax, GST, etc.
  • Will sub-letting a room (or an entire rented premises) without the consent of your landlord be a breach of your tenancy agreement?  Some landlords have evicted their tenants after discovering they had listed the premises on Airbnb and were hosting guests.House Rental Agreements
  • Will providing short term accommodation comply with your strata / building rules?  It is the host’s responsibility to comply with any applicable rules and regulations, some of which do not allow short term letting of 3 months or less.
  • Who will be liable if the guest suffers injuries?  Injuries to Airbnb guests may not be covered under your buildings strata insurance.  You may need to consider taking out liability coverage in addition to property coverage, under your insurance policy.
  • Who is liable for property damage and loss?  Does your insurance cover damage and loss caused by short term lettings?  Talk to your insurance provider and let them know of the situation - you may need to take out extra coverage which means additional cost.  Advise your insurance provider of the change in circumstances before the guest arrives to ensure that your insurance cover is adequate and will not be voided.

While some authorities are actively fighting the changes that Airbnb are bringing to the market, such as the aggressive legal action taken by New York City against Airbnb, others, including Australia, are welcoming the growing Airbnb trend.

The NSW Government has recently adapted its regulatory framework to reflect this innovative, cost-effective and appealing approach to the travel market. Among the changes introduced is a Code of Conduct outlining the rights and obligations of online booking platforms, hosts, letting agents and guests. All parties must comply with the baseline requirements or risk facing serious penalties. You can read more about the changes here.

More information

Airbnb recommendationsfor hosts

House rental agreements

New laws imposing obligations on booking platforms, hosts, letting agents and guests in NSW

Last Reviewed 26 May 2021 by Kirra Griffin

kirra griffin headshotKirra Griffin is a final-year law student at Melbourne Law School. As our resident legal assistant, Kirra uses her specialised knowledge of the law to translate complex concepts into easily digestible information.

 

 



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