19 September 2016

Tenant Sub-Letting to Air BnB Accommodation Risks Landlord Properties

Queensland investors with Tenants sub-letting all or part of a dwelling to Airbnb customers could be left exposed unless special wording is applied to Residential Tenancy Agreements.


The issue has become a hot topic in Victoria because the Supreme Court had overturned the tribunal decision.
In the Victoria case, the tenant sub-let the entire premises through an Airbnb rental website. Upon receiving this knowledge, the Landlord served a termination notice on the tenant.

The Tribunal ruled in favour of the tenant, but subsequently the Supreme Court ruled in favour of the Landlord based on the fact that the Airbnb agreement between the tenant and the Airbnb guests was for occupation of the whole of the premises.

The supplier of real estate agent agreements and contracts ADL Forms said; "This may indicate a tenant occupying premises under a residential tenancy agreement in Victoria may be able to license a portion of the premises under an Airbnb agreement without the Landlord's permission."

The Forms and Agent Advocacy service provider together their legal teams, have put their "Tenancy Agreements, Australia wide, under the microscope to ensure they keep landlords protected against a tenant sub-letting and/or licensing all or part of a rental premises without the Landlord's permission."

It's the opinion of ADL that the existing RTA Form 18a does not adequately cover the Airbnb situation. Special terms therefore have been added to better protect the Landlord against unauthorised sub-letting or licensing in respect of Airbnb or similar online service.
In accordance with the ADL special terms:
"The Tenant may not grant other person’s a licence to occupy or use the whole or part of the premises for the Tenant’s commercial gain, whether by written or verbal agreement with the other person/s, without the Lessor’s consent having been first obtained. The Lessor must act reasonably."
Property managers are still advised to take their responsibly seriously and take action where unauthorised sub-letting or licensing by a tenant of one of their managed properties is detected.

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Landlords seeking to managed their own properties are warned of these risks. Especially if adequate general and special terms are not considered and executed in writing in accordance with relevant residential tenancy and/or rooming accommodation legislation.

Although some Landlords seek to minimise their costs to maximise profits, or don't have faith in professional managers, implementing a proper risk management system for your investment properties could save you more money then you could anticipate.

In some instances, damages or losses resulting from a tenancy not subject to proper risk mitigation principals by the Landlord could be jeopardising their insurance policies because of some of the fine print in the insurance policy.
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