When it comes to short-term rentals, are you ever on the right side of the law?
Since its launch in 2008, Airbnb has grown rapidly around the world. However, it’s now facing a backlash in a number of countries when it comes to its impact on holiday and short-term rentals.
A stranger is just a friend you haven’t met
Collaborative consumption revolution, community marketplace, peer to peer networks - whatever you call it, these concepts have quickly taken over many aspects of our lives.
Cities around the world are using network technologies to do so much more with renting, lending, swapping and sharing on a scale that no one thought possible.
Enter Airbnb, where spare rooms, holiday homes, treehouses and even teepees become an avenue to make money.
The company describes itself as a “community marketplace for people to list, discover, and book unique accommodations around the world.” With a presence in more than 190 countries, Airbnb’s method seems to work. But at what cost?
Recently, in New York City, Airbnb hosts were advised that they could be in breach of the law. Certain types of “Class A” multiple dwellings (for instance, apartment houses) may only be used for permanent residence purposes. The law is that a permanent resident must be present to sublet a residential apartment for less than 30 days.
In Spain, the Catalan Government has fined Airbnb 30,000 Euros for a serious breach of local tourism laws. Apartments advertised on the site did not appear in the region’s official register of tourist properties and the site ran advertisements for individual rooms in private apartments, which is illegal in Catalonia. Further, Spanish law allows homeowners to rent to travellers on a short-term basis as long as they declare and pay income tax on revenue. However, in times of economic crisis, those homeowners have ‘forgotten’ to declare the extra income and now face strict new laws.
In Berlin, a new housing law bans regular short-term letting of rooms without permission from the authorities, which may be subject to conditions, including paying compensation for lost living space.
Airbnb’s terms of service, last updated 30 June 2014, now state that hosts need to check with cities for zoning or administrative codes on whether it is illegal or if they need to register, get a permit or obtain a licence. This essentially puts the onus on hosts to determine whether they are breaching local law.
It reads: “Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement. Hosts should review local laws before listing a space on Airbnb.”
In NSW, short-term holiday rentals are overseen by council and zoning usually determines whether your home can be let out as a holiday rental.
A recent case in the Land and Environment Court is likely to change the tradition of Central Coast homeowners supplementing their incomes by renting out their homes whilst they are not using them. In Dobrohotoff v Bennic  NSWLEC 61, the Court found that the use of a dwelling house, zoned residential under the Environmental Planning and Assessment Act, for the purpose of short-term holiday rentals is effectively a separate and independent planning use that requires development consent under the Act. A development consent for a dwelling house is not likely to authorise such a use. This leaves many owners who rent homes to holiday makers vulnerable to litigation for beach of the Act. When considering what constitutes a “dwelling”, the Court considered the critical element of permanence (amongst other things).
When it comes to Airbnb, many agents say the website is just another avenue to rent out homes for short-term stays.
“From an agent’s perspective, Airbnb is just another advertising website like Stayz or Home Away. Just because it is rented through Airbnb doesn’t make it a legal use, in fact many holiday lettings through the site are illegal,” Simone Koen, REINSW Holiday & Short Term Chapter Chair, said.
According to Ms Koen, the holiday rental market is going through a period of change.
“Organisations are encouraged to endorse and agree to implement the Holiday Rental Code of Conduct, which addresses issues with noise and neighbourhood amenity. Agents who are members of REINSW are strongly encouraged to abide by the Code.
Airbnb in stats
- 98% of hosts suggest local attractions, restaurants and shops, increasing local tourism.
- 59% of hosts in Sydney are over 40. A typical host earns $4505 per year.
- 80% of Airbnb listings in Sydney are outside of main tourist areas.
- 48% of Airbnb guests were first-time visitors to Sydney last year.
This article was first published in the September 2014 edition of the REINSW Real Estate Journal.