For many travelers, Airbnb is a holiday godsend, but for landlords it can be little more than a big pain in the hip pocket.
So, if your tenant is using Airbnb, how does it affect you as the property owner?
As always, legislation can be slow to keep up with the ever-changing world we live in.
So, in the meantime, how can you protect your investment property from turning up on Airbnb without your knowledge?
Currently, in Victoria, the Real Estate Institute of Victoria’s standard lease requires tenants to request permission from the landlord to sublet, which is what they should do if they’re renting out the property on Airbnb.
And it’s much the same in every other state.
In reality, however, this permission is rarely sought and some tenants just do as they please without any notification whatsoever.
This leaves a landlord exposed to potential mine field of issues!
One way around this is to ensure your property manager conducts regular routine inspections, in accordance with the legislation, to ensure tenants are complying with their lease.
The question then becomes how do you recognise an Airbnb guest from a regular tenant?
Tell-tale signs could be visible luggage, external key safes, or perhaps signs of more occupants than had previously been approved to live in the property – this is where your professional property manager can assist you.
From an insurance perspective, it’s important to confirm with your insurer that they will cover any loss or damage as a result of your tenant subletting without your consent.
What is tenancy exclusive access?
When it comes to your responsibilities to the owners corporation, under the current legislation, it all depends on whether the tenant no longer has exclusive access to the property.
Now, the term “exclusive access” is very important when determining the nature of a tenant who is subletting on Airbnb.
If, for example, your tenant has a friend move in, regardless of whether they inform you as the landlord, the owners corporation can do little as the tenant still has exclusive access.
However, if the tenant on the lease is found to no longer have exclusive access then this may be a breach of the owners corporation rules unless otherwise negotiated.
This where the mine field of issues begins.
An example of not having exclusive access would be a key safe outside the building or apartment that your tenant has left for Airbnb guests to gain access “exclusively”.
Once this has been established as being the case, your tenant is in breach of the subletting clause in their lease and tribunal proceedings can be be commenced.
However this can come at a significant cost to you as property managers charge for their time to attend the tribunal as well as for preparation and presentation plus there are various tribunals fees.
In Victoria, for example, this would normally consist of issuing the tenant with a 14-day notice to vacate and applying for a hearing for possession with VCAT.
While this can be a relatively straightforward process, it’s not necessarily the best strategy if it can be avoided.
If the tenant is otherwise good, looks after the property well and pays rent on time, it may be worthwhile negotiating with them and issuing a breach notice for the subletting clause instead.
As a landlord you are essentially running a business, which has overheads that should be kept to a minimum wherever possible – and that includes unnecessary vacancy.
So if you are otherwise happy with your tenant, then wouldn’t a slap on the wrist in the form of a breach notice not make better business sense than an eviction?
The bottom line on Airbnb
Airbnb should only be a threat if you as the landlord haven’t put the necessary provisions in place to prevent your tenant subletting the property without your knowledge.
Having a well documented lease and an experienced property manager on your team, who knows what to look for, can also help minimise risk.
At the end of the day, where possible, you should try to hold onto good tenants because they are a known quantity.
Sometimes it’s better the devil you know than the devil you don’t.
And most of the time, the devil is simply in the detail.
Subscribe & don’t miss a single episode of michael yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to michael yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.