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The Supreme Court of Victoria decides that an AirBnB rental is a lease and not a licence - 23 September 2016

The Supreme Court of Victoria has recently considered whether renting through AirBnB is a lease or a licence.  In Swan v Uecker [2016] VSC 313 (10 June 2016) the tenant, who rented an apartment pursuant to a residential tenancy agreement which included a term that the tenant could not sub-let the apartment, allowed guests to stay at the apartment for short term stays booked through the AirBnB website.

The Victorian Civil and Administrative Tribunal dismissed the application on the basis that the Respondents had merely granted licences to AirBnB guests, not leases, such that the tenants had not sub-let the apartment in breach of their tenancy agreement.

However, on appeal, Justice Croft held that:

“… I am of the opinion that the AirBnB Agreement for occupation of the whole of the Apartment is properly characterised as a lease between the Respondents, the tenants, and the AirBnB guests for the period of occupation agreed between them. 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.”[1]

Justice Croft limited the application of the case by confirming that the case was not about the merits of AirBnB arrangements or whether or not AirBnB arrangements might be said to be “illegal”.  Rather, the case “raised for determination … the legal character of this particular AirBnB arrangement and any consequences this characterisation may have in the context of the terms of the lease of the apartment concerned”.[2]

Based on the Supreme Court’s decision, it is likely that an AirBnB agreement for the occupation of the whole of a property will be characterised as a lease rather than a licence (but this will of course depend upon the particular provisions of the lease and the legislative requirements in each State).  If that is found to be the case then a tenant may be in breach of their lease if they rent the property through AirBnB or any other similar short term letting service without the consent of the Landlord.

While the Supreme Court limited the application of the decision to the facts of the particular case, the decision is a positive outcome for landlords where sub-letting is able to be restricted.

Landlords should consider this decision and any applicable legislative requirements and restrictions when entering into a lease to protect their interests in the event that their tenant decides to rent their property through AirBnB or another similar letting service.  

Click here for a review of how AirBnB and Stayz rentals impact bodies corporate in Queensland.

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[1] Swan v Uecker [2016] VSC 313 (10 June 2016) at 75.
[2] Swan v Uecker [2016] VSC 313 (10 June 2016) at 80.

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