A Supreme Court of Victoria ruling handed down this morning could have serious repercussions for landlords and tenants across the state.
Earlier this morning Honourable Justice Clyde Elliott Croft sided with St Kilda landlord Catherine Swan who was seeking to overturn a Victorian Civil and Administrative Tribunal (VCAT) ruling
that a tenant was not in breach of their lease by offering the use of an entire property through platforms such as Airbnb as a short-term rental.
Swan rented her two-bedroom apartment to tenants Barbara Uecker and Michael Greaves in August 2015 and discovered later that year that Uecker and Greaves had made a spare bedroom in the apartment available through Airbnb.
In January this year the tenants made the entire apartment available through Airbnb as a short term rental opportunity and Swan appealed to VCAT to evict Uecker and Greaves on the grounds they had entered in an unapproved sub-letting arrangement.
In Victoria tenants must gain approval from their landlord before sub-letting an a rental property.
In March, VCAT sided with Uecker and Greaves, classifying the Airbnb arrangement as a "licence to occupy" rather than a lease agreement, meaning the tenants did not have to seek the permission of landlords.
Swan then appealed that decision to the Supreme Court of Victoria and had it successfully set aside.
“I am of the opinion that the Airbnb Agreement for occupation of the whole of the Apartment is properly to be characterised as a lease between the Respondents, the tenants, and the Airbnb guests for the period of occupation agreed between them,” Croft said in his ruling.
“It follows that their entering into this Agreement is, having regard to their own tenancy of the Apartment, a sub-lease. Consequently, the Respondents, the tenants, are in breach of the provisions of their lease of the apartment, namely, cl 54 of the “Additional Terms” which does not permit sub-letting without the written authorisation from the landlord or the landlord’s agent,” Croft said.
In his ruling, Croft said the original move by Swan to evict Uecker and Greaves was valid and she should be granted possession of the apartment.
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