Let’s be blunt, Air BNB makes it possible for your tenant to make extra income whilst you bear all the risk! Air BNB is a new trend that enables tenants to holiday let rooms or an entire property on a per night basis.

This could put Investment Properties at serious risk of damage and compromise the security of properties, with no reward for the Landlords.

Current tenancy legislation is outdated, as it was written before Air BNB existed, so landlords should be proactive and protect themselves.

*Just a quick note; always seek professional advice from a lawyer before acting on anything.

The Supreme Court has recently overruled a VCAT (Tribunal) decision to evict tenants who sublet a property through Air BNB. As a result of this decision, Landlords should now start inserting a "Special Condition” in their Lease Agreements, regarding Air BNB.

Air BNB allows anyone, including tenants, to advertise a room or an entire property, to strangers anywhere around the world, for short term stays. It is becoming extremely lucrative.

A recent survey conducted by "Learn Air BNB” found that about 35% of hosts are in actual fact, tenants themselves. So the chances of your tenant, listing your property, on short term rental sites is pretty high, especially if your property is in the inner city.

Air BNB have said that they currently have more than 8000 listings just in Victoria.

According to Fairfax Media, 1500 of these were in Melbourne’s Inner City Suburbs.

Supreme Court Case, Victoria June 2016

A Melbourne Landlord won the right to evict her tenants after it was discovered that they were subletting her apartment on Air BNB.

The Landlord originally took the matter to VCAT earlier in the year, however the decision fell in favour of the tenants.

VCAT had ruled that the tenants were in fact not "subletting” the property but rather, were providing guests a "licence” to occupy the property. As a result, the tenant was not subletting and could stay in the property.

The Landlord appealed to the Supreme Court, which overruled the VCAT decision and ordered for the tenancy to be ended.

How do you avoid AirBNB Tenants?

Landlords should use a "Special Condition” in their Lease Agreement to make it clear that you do not agree to subletting through AirBNB.

According to the Supreme Court ruling, if a tenant is subletting the entire property, they are giving exclusive rights to their guests, and are therefore subletting.

If the tenant only sublets one room or part of the house, it is unclear if this is subletting, as they are not giving away exclusive rights.

To mitigate and damage and security threats, make it very clear that renting on Air BNB is not permitted in your Lease Agreement.

Make it very clear in the Agreement, the full names of the people permitted to live in the property.

What about Landlord Insurance?

Most policies do not include subletting, so any damage as a result of subletting will not be covered.

In some cases however, if you didn’t know the tenant was subletting and there was damage, you may be able to make a successful claim on your insurance.

Another option to mitigate any risks, is to charge extra rent and allow your tenants to sublet via Air BNB on request.

Air BNB do have a "Host Guarantee” for damages up to $1,000 000, but this claim is out of your hands, as the Agreement is with your tenant.

All in all, it is safe to say that allowing tenants to sublet via Air BNB is risky until they have proved themselves to be responsible people and then it should only be considered on a rent increase to cover your risk as a Landlord.

RealRenta.com.au – Just a better Way to Manage your Rental Property
Jason Gwerder
Saturday, 2 July 2016

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