The result of a case currently before the Supreme Court of Victoria could have serious ramifications for landlords, tenants and the short term rental industry.
According to Fairfax Media report, St Kilda landlord Catherine Swan believes tenants Barbara Uecker and Michael Greaves have breached their lease agreement by advertising Swan’s apartment through Airbnb.
Swan is arguing that by offering the apartment as a short term rental through Airnbnb, Uecker and Greaves are subletting the apartment, which in Victoria can only be done with the permission of the landlord.
The case is before the Supreme Court as Swan is seeking to overturn a previous decision by the Victorian Civil and Administrative Tribunal (VCAT) that classified offering the property through Airbnb as a "licence to occupy" rather than a leases agreement, meaning the tenants did not have to seek the permission of landlords.
Cameron Osborne, director of property management firm Melbourne Asset Management, said the proceedings of the court case are being closely watched and he would hope to see the court rule in Swan’s favour.
“There are a lot of agents who are very interested in the result of this court case. It will be very interesting to see what decision the court comes out with,” Osborne said.
“To me if you own the property then you should have some say in who lives there. What’s the point of us doing a reference check if a property’s just going to put on Airbnb and anybody can stay there?” he said.
Osborne said the court’s verdict will be especially important given the fact that tenants offering properties through platforms like Airbnb is becoming increasingly popular.
“I’ve had this sort of situation happen about three times now. We’ve had other people tip us off and tell us that tenants are sub-letting a property.
“Each time we’ve spoken to the tenant and they seem to know they’re probably doing something wrong and they stop after we discuss it to them.
“To be fair to property owner they should [be required to get permission]. It’s the owner’s insurance that has to cover them if something happens.”
In particular, Osborne said it is becoming increasingly popular for people to rent a property with only the intention of offering it as a short term rental.
“We’re getting a lot of people at the moment who are leasing properties and then just subletting them out on a short term basis for financial gain.
“They’ll rent a house and then the next thing you know it’s advertised with a daily rate somewhere else. They might be renting a place for $400 or $500 dollars a week but then they can lease it out for $150 a night.
“It’s becoming more and more popular, especially in the sort of holiday areas and the areas where students want to live.
“People are renting a three bedroom house, sticking a set of bunks in each room and then renting each room on an individual basis and we as the property managers just have no idea who is living there.”
Osborne said his firm has tried to prevent the practice through the use of clauses in their rental agreements, but ruling such as the VCAT’s "licence to occupy" decision have made it hard for them to have any real effect.
“It’s not easy to get a result from the tribunal. You’ve got to be able to prove that there’s some sort of written agreement between the people who are staying there.
“We’ve been putting in a clause in our leases for the last 12 months that says tenants can’t use Airbnb or platforms like it, but it’s basically a clause that’s pretty toothless.
“If the court turns around and says tenants can do this, then it doesn’t matter what we put in the lease.”
Can you afford to buy in this suburb? Find out how much you can borrow
Top Suburbs :
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out