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Websites such as Airbnb and Stayz have changed the way we access accommodation. Instead of booking a hotel or holiday property directly, you can use a third-party site. These websites introduce you to a property owner wanting to rent their property short-term. However, there are some legal challenges facing these websites in Australia.
This article will explore how our current laws are failing to keep up with the new disrupters in the accommodation industry, such as Airbnb, and the regulations that homeowners must follow if they want to rent out their homes.
What Are Council Zoning Laws?
The laws regulating Airbnb rentals about re different in each state. In certain states, local government laws are different from state laws. This can cause some confusion for people who want to rent their homes through third-party sites.
In addition, changes to NSW laws mean some apartment owners could be banned entirely from renting out their properties with Airbnb. Under these laws, strata owners can pass rules that prevent short-term rentals if the owner does not live in the unit or apartment. These are known as by-laws, and all owners and tenants must comply. These laws also introduced a 180-day cap on how many nights owners can rent out their homes if they are based in the greater Sydney area, along with a mandatory Code of Conduct.
Councils can also require Airbnb property owners to register and provide a valid registration number to Airbnb.
Ensuring that you comply with council zoning laws and codes of conduct is very important, as it can have severe ramifications on whether you can continue to list your Airbnb.
The Exclusion Register (the Register) lists guests and hosts excluded from participating in the NSW short-rental accommodation industry. Being listed on the Register can be devastating for anyone looking to make a living from Airbnb or use it as a supplementary income. You will be listed on the Register if NSW Fair Trading finds you have committed two serious breaches of the Code of Conduct within two years. This can lead to being excluded from the short-rental accommodation industry for five years.
As this is the case, you must familiarise yourself with the relevant council requirements or codes of conduct and any pertinent laws that will affect you before you open your Airbnb.
Should I Sub-lease or Licence the Premises?
Another issue surrounding the emergence of Airbnb is whether or not these short-term rentals are a sublease or a licence. Generally, you must obtain the landlord’s consent to sublease the property under a lease agreement. A landlord is allowed to permit another person to occupy their property for a specific purpose and for a set period if they have a licence.
For example, in a Melbourne-based case, a landlord leased an apartment to tenants, who then listed the apartment on Airbnb without the landlord’s consent. The Supreme Court of Victoria decided that because the Airbnb guests had “exclusive possession” of the apartment, that this was a sublease requiring landlord consent under the lease agreement.
What Are the Tax Implications?
The Australian Tax Office (ATO) has also raised its concerns with the increasing use of Airbnb in Australia. The primary concern is that people use Airbnb to evade taxes such as Capital Gains Tax (CGT) and GST.
The income that you receive from your Airbnb rental is generally considered to be part of your assessable income. You may also be entitled to claim tax deductions for expenses incurred for the property as a landlord. These can include:
- commercial cleaning;
- repairs; and
Therefore, if you rent your property through Airbnb, you must keep income records and declare it in your tax return. Generally, the sale of private property is free from CGT. However, you may be liable for CGT if you used the property to earn income, such as renting through Airbnb.
What Are Regulatory Issues?
Other regulatory issues arise in light of the use of Airbnb and Stayz websites. However, the regulations for this area have yet entirely to develop.
As a Landlord, you may have insurance for public liability claims and specific damage to your investment property. If you are using Airbnb, you could be obligated to notify your insurer. Generally, Airbnb Host Protection Insurance provides a different type of cover than, for example, landlord or buildings and contents insurance.
Other regulatory issues for a landlord to consider are:
- fire or disability access regulations; and
- food, health and safety regulations.
This guide will help you to understand your options when you purchase a business with leased premises.
Websites such as Airbnb and Stayz have provided other avenues for people to find accommodation. They have also provided owners and renters (with permission) the opportunity to earn some extra income from their properties. However, the law in this area is still developing. Staying up to date with the law and knowing your rights is essential.
If you are planning to rent out your property through Airbnb and Stayz you should:
- be aware of the local laws and Codes of Conduct in your area to ensure that you can rent out your property in the first place;
- if you are a tenant of a property, make sure you are not in breach of your lease agreement and seek permission from your landlord as necessary; and
- consider the tax obligations that may arise along with any regulations you must adhere to.
If you need assistance understanding what regulations you must comply with, our experienced regulatory compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
If you are renting your property through Airbnb, you must keep records of your income and declare it in your tax return. Generally, the sale of private property is free from CGT. However, you may be liable for CGT if you used the property to earn income, such as renting through Airbnb.
The Exclusion Register lists guests and hosts excluded from participating in the NSW short-rental accommodation industry. You will be listed on the Register if NSW Fair Trading finds you have committed two serious breaches of the Code of Conduct within two years. This can lead to being excluded from the short-rental accommodation industry for five years.
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