Tenants can see Airbnb as a good idea for renting a spare room and making some additional income. While this is a good way for tenants to support their financial concerns, it can expose landlords to many potential problems.
Can Tenants Use Your Property as an Airbnb?
What is Airbnb?
Airbnb is an online platform that allows homeowners to offer short term accommodation to others. The platform is incredibly popular for people seeking a place to stay for less than the cost of most hotels. Finding a place to stay is very easy through the Airbnb app. First, you’ll see a map of your local area (or a searched location), and the available rooms will be displayed with the price per night.
As Airbnb is the marketplace that hosts listings, it is not responsible for the conduct of either owner or the guest. Airbnb has had some issues where guests have refused to leave or caused other problems (noise, damage, etc.) for the owners.
Hosts will make money by leasing extra rooms, and Airbnb makes money by charging a percentage of the total daily fee of booked rooms. The host determines the cost of a room, and they’re also responsible for listing the property and noting any rules that need to be followed.
Why are renters subletting on Airbnb?
It is very tempting for renters to list a spare room they have available on Airbnb because they can make a surprising amount of money. In Melbourne, it is possible to rent an apartment on Airbnb at a rate of $50 to $300 for a one night stay. Single room rates in Melbourne can be anywhere from $20 to $100 per night, with the current tenant staying in another room. If your home is in a popular tourist spot in Melbourne, such as St. Kilda, then Airbnb can be in high demand, increasing the rates. It is easy to see why Airbnb is so attractive to renters with these figures.
There are several occasions where renters were not notifying their landlords of their plans to list a property on Airbnb. This is often caused by renters not fully understanding the rules and regulations and seeing it as not a significant concern. However, when landlords discover their property is listed on Airbnb (often by checking the app), they are shocked to see it.
While most Airbnb guests are not a problem, the 1% that treat the home poorly can do a lot of damage, and it can be challenging to get guests to pay for any repairs they cause during their stay. Many landlords may consider it unfair that a renter makes additional money from their property while the landlord needs to pay for additional maintenance costs.
How many Airbnb properties are in Melbourne?
In Victoria, over 30,000 Airbnb stays are available, and the hosts of these listings can average $5,200 per year. The majority of listings are for entire home properties, where the guest has free-range and can use everything the home offers. The homeowners are not present in this situation but will come back later and clean up, ready for the next guest.
Listing your place on Airbnb is becoming an excellent way to provide homeowners with a little extra income. But problems can arise in situations with body corporates. Airbnb has been called on to fight body corporates in court when bans on short-stay accommodation were put in place. VCAT found in favour of Airbnb, ruling that a ban on short stays of under 30 days was not enforceable.
The general idea of Airbnb is it’s the same as having a friend stay over for a few days and them giving you some cash before they leave. Airbnb is simply a way of finding that ‘friend’.
What do the courts say about tenants listing an Airbnb?
In June 2016, the Supreme Court of Victoria ruled that tenants had breached their lease by using the property as an Airbnb. It was decided that the tenants had effectively set up a sub-leasing arrangement. In the tenancy agreement, this was prohibited unless the landlord provided consent.
This case was heard at the Supreme Court of Victoria after the Victorian Civil and Administrative Tribunal (VCAT) had ruled in favour of the tenants. VCAT had decided that the rooms used as an Airbnb were a licensing issue and not a sublease. This ruling was concluded because the Airbnb guests did not have exclusive use of the property.
The laws regarding subletting
Consumer Affairs Victoria states that ‘a tenant must get written permission from the landlord before subletting’. However, a landlord must give good reason to refuse this request, and often they will need to accept the request when asked.
If a tenant does not request permission from the landlord and they list an Airbnb, they could be seen as being in breach of their leasing agreement and be served with a 14-day notice to vacate the property. However, this decision may be overruled when taken to VCAT or the Supreme Court of Victoria.
As Airbnb is reasonably new (launched in 2008), the laws are yet to catch up and decide what Airbnb constitutes for rental properties. If an Airbnb guest destroys a rental property, who is liable? Will the landlord need to take action against a potential anonymous guest? Or does the existing tenant need to pay for damages? Will tenancy insurance cover the damage? There are many variables in place, and perhaps a better solution is to not allow for a rented property to be used as an Airbnb.
Airbnb does offer a Host Guarantee if a guest damages your property. However, some hosts have suggested it is easier to draw blood from a stone. The Host Guarantee is linked to the Airbnb listing, and these must be worded very clearly, such as if you say a guest may not
Is a tenant listing your property on Airbnb bad?
Having a tenant using your property to make extra cash is not that bad. If it helps them pay their rent on time, then some may consider it a good idea. The problems arise because you should have the final say on who is staying in your property as the landlord.
As a landlord, you are ultimately responsible for what happens on your property. Who is liable if an Airbnb guest has a party on your property with some anonymous guests and damages something or is injured? Is it you as the property owner, or is it your tenant as the Airbnb host? In many of these situations, the decision is made through the courts, which can take time, which may mean you cannot rent the property until it is sorted out.
If you provide permission for your tenant to use your property as an Airbnb, it may be best to work with them and write some rules and guidelines. Although, you may find it best to stop your tenant from listing an Airbnb altogether.
How can landlords protect their property from being used as an Airbnb?
The best method for stopping your tenants from subletting your property is to add a clause to the lease agreement. This may not be possible in some situations until the current lease agreement has expired.
While it is tempting to make your intentions clear by naming Airbnb, other platforms operate similarly (e.g., Stayz). It isn’t easy to name all possible platforms, so adding a clause that explicitly states the tenant cannot sublease the property should be enough. A clause such as described can stop your tenants in their tracks, and it can avoid any lengthy legal battles regarding subletting your property.
If you need assistance with amending your lease agreement, you can talk to the experts at Wise for a free consultation. Call today!