In brief - Check your insurance policy and local council
While Airbnb and other home sharing platforms are becoming
increasingly popular, those planning to rent out their homes to
short term tenants should consider their insurance arrangements and
their local council's planning laws before taking the
What is Airbnb?
Airbnb is a home sharing platform that connects travellers and
other people looking for accommodation with those looking to rent
their homes or parts of them. Founded in 2008, Airbnb has now
extended to over 34,000 cities in 192 countries and has been valued
at approximately $10 billion. Airbnb now has numerous competitors
in Australia and overseas, including HomeAway, VRBO, HotelTonight,
FlipKey and VacationRentals.
Do you need to apply to your local council for development
In Australia, the operation of short term holiday rentals was
recently addressed in Dobrohotoff v Bennic  NSWLEC 61. In this case,
neighbours complained about the disturbance caused by short term
tenants in a residence owned by the respondent.
Her Honour Justice Pepper found that the use of a dwelling for
the purpose of short term holiday rentals was effectively a
separate and independent planning use, which required development
consent under the Environmental Planning and Assessment Act (1979).
Therefore, those wishing to engage in the business of short term
rentals through online home sharing platforms, such as Airbnb,
should seek independent advice as to whether they are required to
apply for consent from their local council in order to avoid
Notify your insurance company
Insurance is another important consideration when deciding to
rent out one's premises.
Following an incident in 2011, when an apartment sustained
significant damage during a rental, Airbnb decided to implement a
$50,000 guarantee for hosts to cover property damage. This
"host guarantee" has subsequently been increased to $1
million since May 2012 and is offered free of charge.
Although many people have home and contents insurance, most do
not realise that in accordance with the Insurance Contracts Act 1984 (Cth), they are required
to notify their insurer if there is any change in circumstances,
such as a decision to offer their premises for short term rental.
Failure to notify an insurer of a change in living conditions could
be considered a breach of the contract and as such may void the
Think before you click
Here are a few tips to follow before you rent out part of your
home or your entire property:
If you are a leaseholder, check your lease agreement to
determine whether you are authorised to sublet.
Check the local law relating to planning use.
Talk to your insurer first and check whether you are covered
for short term rentals.
Thoroughly investigate the prospective guest's
Check that fire alarms, appliances and gas connections are all
Opportunity for insurers to innovate
At present, the Australian market has been slow to respond to
the demand for tailored insurance products to cover peer-to-peer
short term rentals. This is an opportunity for insurance companies
to innovate and create niche insurance products to cover this ever
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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