Brian Cannan: Today I'm with Lisa Jemmeson from Jemmeson Fisher Solicitors and Accountants. Good afternoon Lisa.
Lisa Jemmeson: Good afternoon.
Brian: Well our subject today is very interesting, it's certainly at point with what's happening at the moment and that is Airbnb. What's happening with Airbnb?
Lisa: Interestingly down in Victoria last year there was a case run along the lines of tenants under a residential tenancy agreement subletting and listing their property on Airbnb the website so in this particular case a landlord rented their property to a tenant for a period of 12 months and those tenants listed that particular property on Airbnb on the website and the Landlord took that as a breach of the residential tenancy agreement and issued a termination notice. The tenants failed to vacate because they said they weren't subletting the property and the matter went off to VCAT which is similar in New South Wales to NCAT.
Brian: What happened? Who won?
Lisa: The tenant won!
Brian: The tenant won!
Lisa: The tenant won, at first instance because VCAT determined that the disposition that the occupants from Airbnb were given was a license and not a lease so they weren't given exclusive possession.
Brian: It was a license and not a lease and that made the difference. So what happened then?
Lisa: Well the landlord appealed, thankfully, and so the matter went before the Supreme Court down in Victoria and the decision was reversed in the Supreme Court and they looked at the actual disposition and what amounts to exclusive possession, which is what tenants are given under a residential tenancy agreement and so they looked at three particular areas but one of the arguments that was raised by the tenants was the fact that under the terms and conditions of the agreement on Airbnb it said your reservation of the property amounts to a license and one of the things the court said is that you may well call something a license but it doesn't make it so and so ultimately the landlord was successful.
Brian: So what does this mean for New South Wales agents?
Lisa: Well very importantly, when the Victorian Supreme Court looked at this matter they looked at it in the context of the tenants renting the whole of the apartment and the decisions been tempered to say that if a tenant only rented a room in their apartment, for example, the ruling wouldn't necessarily apply so they wouldn't necessarily be a finding that the tenants were subletting and therefore be a breach of the lease so that's very important for agents to keep in mind because I think it's a very live issue at the moment. Airbnb has over 2 million listings it operates in 191 countries, the fee for tenants to lease the property on Airbnb is about three percent, which is quite a good opportunity for tenants to make money out of it before you start issuing a notice of termination against a tenant you need to ascertain if they're renting a room or they're renting the entire apartment.
Brian: So if a tenant sublets in New South Wales at this stage that is illegal?
Lisa: That's right. It's a breach of the lease. What a tenant is required to do is get consent in writing if they're going to sublet.
Brian: But if they sublet a room?
Lisa: Based on this decision its undecided on a room because the Victorian decision is confined to a entire apartment.
Brian: Just have to wait for that to come through.
Lisa: That's right. Now interestingly after this decision came down we've got owners corporations which are facing an additional burden in relation to short term accommodation.
Brian: Especially on a common property.
Lisa: Absolutely, so facilities like pools and gyms and lifts are getting a lot more use and there's additional cleaning and so a lot of owners corporations are looking to try and restrict that and so we had a owners corporation that struck up a bylaw which said there is to be no short-term accommodation under one month in our complex.
Brian: And was that in New South Wales?
Lisa: No, this is down in Victoria again.
Brian: Victoria is leading the way here!
Lisa: They are indeed and so then they sought an injunction, this is the owners corporation sought an injunction from VCAT to restrain these owners from renting the property on a short-term basis and off it went to VCAT and VCAT how to look at it and essentially said to the owners corporation you don't have the power to regulate how people use their lots and so they failed at first Instance, it went off to the Supreme Court and again the Supreme Court looked at it and said no you don't have the power under your legislation which is state-based to impose those types of conditions on people that own a strata property.
Brian: Wow, so that's in Victoria?
Brian: So, what does that mean for us in New South Wales?
Lisa: Very different situations. So we in New South Wales we have the Strata Schemes Management Act of 2015 and in New South Wales they do have the power to make bylaws and enforce conditions on lot owners in respect to the usage of the lot and so where we see this is in respect to short-term accommodation so a lot of owners corporations have moved and passed by laws that restrict any accommodation under three months likewise we see a lot with smoking now so a lot previously we had restrictions on smoking on common property and on balconies because of smoke drift but now they've taken the move to restrict smoking inside the lot and it's it's quite interesting because strata title being a former Torrens title, you take that property and that's your title and in New South Wales you have these broad powers to restrict what you actually do inside your unit.
Brian: Yes that's amazing, so what you're really saying is the bottom line that property managers may need to find out the bylaws, especially for Airbnb to help them to stop Airbnb coming to that property.
Lisa: Absolutely. Yes, at the moment there are model bylaws it contained in the residential tenancy agreement but I think a prudent agent is ensuring that if there are additional bylaws they're included into the lease because it's it's going to be a point in issue if the tenant is a smoker and can't smoke inside the property and then they find that out afterwards now it's incumbent on the agent to provide a copy of those bylaws but it doesn't have to be provided till after the lease is signed and it's within 14 days under the strata scheme management act as well but I think again they should be putting it into the lease prior to it being executed.
Brian: It's all very interesting Lisa, thank you very much for that!