In today’s increasingly digital world, people are engaging in commerce in ways we have never seen before. Whether it be selling your old roller-skates on an online community forum, exchanging in online currencies or even letting out the spare bedroom in your home for a short period of time. The world is changing, and the law is not always able to keep up to date with those changes. One such development where the law may not meet community expectations is with ‘Airbnb’ style arrangements.
Airbnb is an online, worldwide system for renting either all, or part, of a property – such as a bedroom with shared bathroom and kitchen. The site allows individuals to offer up their houses, manage bookings and generate income without needing a holiday letting agent. Similarly, such sites provide travellers with greater choice regarding accommodation options.
Airbnb and other platforms, like Stayz and AURA, have opened up the short-term rental market – for simplicity we refer to these as “Airbnb arrangements”. Here, we will address challenges raised by zoning laws in the ACT, as well as potential insurance issues.
ACT Zoning Laws
Unlike other Australian jurisdictions, in the ACT all residential and commercial land is leasehold. This means the land is leased by the owner from the ACT government for a period of time – usually 99 years. We often refer to these arrangements as a ‘Crown Lease’.
Within its ‘purpose clause’, each individual Crown Lease provides details, among other things, of the specific permissible uses for that land. The purpose clause sets out the zoning for a particular parcel of land; the scope of which can be quite different to that of its neighbouring blocks.
Compliance with the ‘zoning rules’ in the purpose clause is critical. Breaching these rules could lead to the issuing of remedial orders, penalties by the ACT Government, or (in extremely rare cases) termination of a Crown Lease.
In addition, where the property is part of a unit complex, rules of the owners corporation may also have an impact on the legality of such an arrangement.
So, what does this mean for the Airbnb host?
We recommend that all Airbnb hosts seek legal advice in order to clarify the legality, from a zoning perspective, of any proposed Airbnb arrangements planned for their property.
In an article on this issue, the consumer magazine Choice wrote:
“[Airbnb arrangements are] a more affordable option for savvy travellers, yet it’s a potential minefield when it comes to insurance. The business of renting your home for short-term accommodation isn’t regulated like the hotel industry, and safety of the guest is likely not covered by insurance.”
It is vital that Airbnb hosts have all the necessary insurances in place to provide protection should a claim be made against them.
We recommend you seek written advice from your insurance company as to whether you have cover for short-term rental arrangements. If not, which is often the case, you should investigate taking out additional insurance cover either directly with an insurance company or through an insurance broker.
Airbnb arrangements create novel complications from a legal point of view. While it can be simple to set yourself up as a host, issues that arise whilst hosting may prove anything but straightforward.
If you have any questions regarding the legal issues surrounding renting out your home using Airbnb or other platforms, get in contact with Bede Foundling on (02) 6140 3263 or [email protected].