Airbnb is never far away from the headlines. In June 2018 the NSW government announced severe restrictions on short stay accommodation. It remains to be seen how that will work in practice, and if Queensland will impose similar restrictions.

Body Corporates, owners, and on-site managers are justifiably concerned about the rising popularity of home sharing services, and other online travel agents, in Community Title Schemes. There is a large range of legal and practical concerns, many of which I have listed below.

Aside from the mainstream news, legal issues surrounding Airbnb continue to develop. Recent cases include whether a landlord has a right to terminate if their tenant “ghost hosts”; noise and insurance issues; and various Adjudication applications in the Commissioner’s Office. I’ll come back to some of these issues shortly.

I’m not targeting Airbnb in particular, but rather using that term generically to refer to the many similar online travel agent services.

Naturally, I can’t condone “self-help” remedies I have heard about, such as supergluing locks, or building managers disconnecting the electricity. All situations are different, so seek legal advice before taking action. This article isn’t a substitute for that advice.

Current Events

“Ghost hosting” is an emerging issue. This occurs when someone claiming to be a legitimate long termtenant subleases the property to a third party – e.g. over Airbnb. In Victoria, the Supreme Court recently found that Airbnb’ing a property by the tenant, allowed termination of the lease by the landlord.

Individual results may differ depending on the exact circumstances.

I have had several reports from managers, who are approached by prospective tenants, offering to rent multiple units and pay more than the market rent. Those people could be “ghost hosts” – re-letting and managing the apartment/s on Airbnb. Any lease should be very clear about the approved occupants of the property and that any kind of sublease or licence of the property is prohibited. Absent owners, who are not in the letting pool, can easily be targets of ghost hosts.

Owners can be responsible for damage to common property by the Airbnb guests, even if the tenant is Airbnb’ing the property without the direct knowledge of the owner. Owners who suspect something, should consider if they need to take action to minimise this risk.

By-laws: In Queensland, current laws provide that the Body Corporate cannot discriminate against different types of residential occupiers in its by-laws. This means the Body Corporate does not have the power to make by-laws preventing short-term letting in a residential building. There have been a few cases about this and the issue is now fully resolved in Queensland based on current legislation.

Changes in NSW announced in June 2018 will allow NSW Body Corporates to change their by-laws to restrict short term accommodation in some ways. It remains to be seen if Queensland will follow the lead.

Noise: There is room to deal with the consequences of Airbnb’ing, indirectly via the more mundane bylaws. In at least 1 case, a lot owner was compelled to take steps to replace tiles to prevent disturbance to other owners by that lot owners Airbnb guests.

Insurance Costs: There has been a recent Adjudicators decision where a lot owner was ordered to pay the Body Corporates additional insurance costs incurred as a result of that lot being used for short term occupation. I do wonder if this was the correct decision.

Liability of Lot Owner? Many by-laws contain rules which, at least on the surface, appear to make lot owners responsible for by law breaches by any occupants of their property. This could include breaches of “amenity” by-laws, such as noise, or damage to the common property. Some Body Corporates are using security cameras to help track responsibility for that damage to occupiers of particular lots. There are many rules about by-laws, and they can’t always be taken at face value. Even with proof of damage, there can be major legal problems with trying to make specific lot owners financially responsible for the behaviour of their occupiers.

Party Houses: In 2014, Queensland planning laws were amended to allow local councils to take actiontargeting party houses. Enquire with your local council.

Town Planning Conditions: It’s possible that a change in use of the building over time could breach town planning conditions. Individual development approval conditions need to be checked and specialist advice obtained in each case.

Building classifications: The Body Corporate and lot owners are required to ensure that the use of a building complies with the certificate of classification issued under the Building Act 1974.

Most residential buildings are in class 2. There is an argument that ANY short term letting could breach the building owner’s obligations, on the basis that short term use of the premises requires a “class 3” building, i.e. a classification as a hotel.

Several years ago the Watergate Case decided (at least in Victoria), that except in the most obvious case of a large scale hotel, there is little if any restriction on a class 2 building being let for short term accommodation. It is unclear if this decision would be followed in Queensland. Although the laws are similar, they are not identical, and the matter technically remains open.

Queensland lawyers would love a test case on town planning and Building Act issues if anyone is interested! Beware, in the Watergate case, I understand the Body Corporates legal costs in unsuccessfully pursuing these issues, were in the 6-7 figure range.

Caretaking and Letting Agreements: Resident managers should check their Agreements before conducting a short-term or Airbnb operation – in some rare cases, these Agreements restrict the Manager from conducting short-term letting operations as an agent for the lot owners.

Reputational Damage: Managers of holiday and corporate let buildings who are experiencing Airbnb’ing, need to carefully consider their reaction to those guests. The guests do not necessarily understand that the on-site manager’s services (new towels, cleaning requests etc) are not available to third-party guests. It is worth being polite and helpful to these people. They may, after all, re-book directly, or leave negative social media reviews.

The Future: There is some talk of the state government or particular councils taking steps to impose limits on short-term occupancy. There are many competing interests.

Of course, an attack on Airbnb could easily be used as an instrument of attack on traditional Management Rights. If short-term accommodation in residential buildings can be limited, this could have a vast impact on the tourism industry. Such an outcome is unlikely to be beneficial, which may be why the issue hasn’t been tested in Queensland.

Riding the wave: There are a number of services (including “Airsorted”) which provide “host management services” such as cleaning, laundry, and keys. Some of Australia’s most successful Airbnb “super hosts” are letting agents who control multiple properties generating millions of dollars in revenue.

With “disruption” in almost every field, those who can adopt and adapt will prosper. Those managers who can take advantage of this opportunity to build value for their owners, can strengthen their management rights business.

If any of these issues are relevant in your building or business, please feel free to call for a free initial consultation.

Contact
Alan McKernan
Special Counsel |  McKays Solicitors