Airbnb leasing: What are a landlord’s rights and responsibilities?
Rolf Howard

Airbnb leasing: What are a landlord’s rights and responsibilities?

tax-and-legal-advice

Airbnb leasing: What are a landlord’s rights and responsibilities?

Until the emergence of Airbnb, landlord’s rights and responsibilities were clearly defined by laws that have been successfully in place for decades. But with the advent of a new form of short-term rental agreement available to those on holiday, or just passing through town, landlords now face questions that have few answers.

Initially, the attempt to regulate when landlords choose to list their property for short-term rental on Airbnb, has come under Section 258 of the Strata Schemes Management Act of 2015. The Act states that a landlord or property owner must notify the corporate holder of the property of any changes that are anticipated in the lease or the sublease of a property within 14 days of the change of the composition of the residents. The information must include the names and addresses of those who will be occupying the residence. In the instance that such information is not provided, the landlord can be held accountable in a court of law and fined $550.

The question then becomes, how does the body corporate discover that the properties are not being occupied by the tenants that have already been screened and approved? There are several ways in which this information can be discovered, including:

  • Reviewing the websites of short-term rental companies, such as Airbnb, to see if the property in question is listed;
  • Visiting the property and watching for the entrance and exit of unfamiliar tenants; and
  • Requesting that other tenants and neighbours watch for unfamiliar visitors and reporting the same to the owner’s corporations.

However, as the problem continues to grow, additional solutions are being presented to the public for their review and comment. Currently the NSW government is proposing the following possibilities to both protect landlords and to promote the economic growth that companies such as Airbnb present to the community.

The following are being proposed:

  • Short-term leasers would be required to pay a tax that would ensure the coverage of the additional usage of amenities by short-term renters, including but not limited to electricity, water, parking, and security needs;
  • A legally imposed time limit on a short-term rental to ensure that the properties are only being used to accommodate vacationers and people on a short holiday or business stay; and
  • Considerations to protect the rights and the safety of neighbours so as to reduce the number of strangers coming and going from residential neighbourhoods.

Striking the proper balance between homeowners, neighbours and the existing laws is a difficult issue. Homeowners and landlords want to preserve their right to do as they please with the homes that they own. This includes the right to lease or sublet their properties for the purpose of financial gain.

Neighbours and communities want to preserve the familiarity of those coming and going from the neighbourhood to protect their safety and the safety of their dwellings. In addition, there are regulatory considerations that must be taken into consideration. These include:

1. Food health and safety concerns
2. Fire or disability access regulations
3. The requirement for public liability insurance

All of the concerns held by landlords, neighbours and legal agencies are reasonable and tenable positions.

A further concern for landlords is the short-term rentals and/or sublets by tenants who do not have permission to do so. In many cases landlords have entered into lease agreements with tenants only after careful scrutiny of the renter to ensure they are renting to financially capable and personally responsible individuals. Yet, landlords are discovering that their approved tenants are then placing the properties on rental sites and subletting the spaces without permission to do so. In these instances, landlords have found themselves with little recourse. Airbnb has indicated that they are not privy to the agreement between the landlord and the tenant, but only to the agreement made between the occupant and the guest. As such, they offer no assistance to those landlords who find their properties being rented via Airbnb.

On the other hand, a recent case allowed a homeowner the right to use Airbnb, overturning the Strata laws in favor of the freedom to do as one pleases with their home. This landmark decision will have significant repercussions for neighbourhoods and the enforcement of bylaws contained in the agreements between homeowners and their governing boards.

To date there is no overarching perfect solution for any of the parties involved. However, there are some common sense precautions a landlord or homeowner can take when deciding to list their property on a short-term rental site:

  • Before using a short-term rental site be sure to carefully review and read all of the terms contained in your service agreement;
  • Keep in mind that the online booking service does not venture into handling disputes that could arise between the homeowner and the visitor. Any issues that arise will need to be handled only between the two participating parties;
  • Check your local town or city restrictions so as not to be in violation of any citywide ordinances;
  • Create clear terms and conditions between yourself and your potential guests;
  • Take safety precautions with keys or electronic entrances;
  • Be clear about the services you will provide your guests including towels, sheets, and hygiene products and the use of home amenities;
  • If you are taking security deposits be sure they are kept in a reliable account so that the monies can be properly returned at the end of the tenure;
  • Inspect your property for safety issues and be sure to clearly describe the types of access available to the property to ensure that persons with disabilities will be able to adequately access both the outside and inside areas of the property; and
  • Provide receipts to show payment has been properly rendered.

If a landlord or homeowner is careful in their research and preparations for short-term guests, it is possible to successfully, and legally, lease to short-term tenants via Airbnb.

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About the Blogger

Rolf Howard

Rolf Howard

Rolf is Managing Partner of Owen Hodge Lawyers. He has been in the legal practice since 1986 and a partner of Owen Hodge Lawyers since 1992. Rolf focuses on assisting clients to proactively manage legal responsibilities and opportunities to achieve competitive advantage.

Rolf concentrates on business planning and formation, directors’ duties, corporate governance, fund raising and business succession. His major interest is to assist business owners and their financial advisers plan and implement strategies to build and exit from successful businesses.

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