In brief: Whilst many seek innovative
opportunities to make a little extra cash on the side,
opportunistic rental tenants may no longer be able to make their
properties available on Airbnb without prior agent and landlord
Following the Victorian Civil and Administrative Tribunal's
(VCAT) decision made in May 2016, involving
tenants who made their rental property available for hire on
Airbnb, the Supreme Court of Victoria has overturned VCAT's
decision in relation to the characterisation of the occupation of
an Airbnb guest.
What you need to know:
Tenants should seek landlord's consent before renting
properties out for short term stays; and
To avoid any uncertainty, landlords and managing agents should
consider inserting new special conditions in their residential
tenancy agreements, prohibiting renting their properties out for
short term stays.
In an earlier
article, we reported VCAT's decision in Swan v Uecker
(Residential Tenancies)  VCAT 483, whereby it was held
that renting out a property on Airbnb is not a lease or sublease,
but a licence.
The facts of the case were as follows.
The landlord and tenants entered into a 12-month residential
tenancy agreement on 21 August 2015, for a property in Fitzroy
Street, St Kilda.
The landlord discovered that the tenants had been using Airbnb
to rent out a room in the property, without her consent.
As a result, on 12 January 2016, the landlord served a Notice
to Vacate on the tenants with a termination date of 2 February
The tenants refused to vacate the property, which led to the
landlord applying to VCAT for a possession order.
VCAT was satisfied that the Airbnb guests did not have exclusive
possession of the property and, therefore, held that the nature of
the relationship between the tenants and the Airbnb guest was not a
sublease but a licence, and the landlord's Notice to Vacate was
held to be invalid.
The matters VCAT took into account in making its decision
included, among other things, the ability of the tenant to make an
overstaying Airbnb guest leave the property, the tenants'
retention of the property as their principal place of residence,
and the ability of the tenants to access the property during an
The landlord appealed VCAT's decision to the Supreme Court
Supreme Court's decision
The Supreme Court overturned VCAT's decision and found that
the occupation of the rented premises by the Airbnb guest
was a sublease, and as a result determined that
the landlord's Notice to Vacate was valid.
The Supreme Court found that VCAT took into account matters that
were irrelevant to the question of whether the Airbnb guests were
in exclusive possession during their stay. In this regards, the
Supreme Court found that the tenants ability to make an overstaying
Airbnb guest leave the property and retention of the property as
their principal place of residence were both irrelevant.
The Supreme Court also found that there was no evidence or other
material to support the findings by VCAT that the tenants were able
to access the property during each Airbnb stay.
Tenants should seek their landlord's consent prior to
renting out properties for short term stays.
Landlord's wanting to avoid any uncertainty should consider
inserting broad prohibitions in the lease on subleasing, assigning,
granting any licence to occupy all or part of the property without
the landlord's prior consent.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.Madgwicks is a member
of Meritas, one of the world's largest law firm
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