Rise of Airbnb

Rise of AirBNB

Earlier this month, Meyer Vandenberg together with the Planning Institute of Australia and Capital Crown Leasing hosted a first of its kind think tank ‘Managing the rise of Airbnb’.

The think tank was held to promote a conversation about the planning and legal intricacies of Airbnb (and other short term holiday letting platforms), against the backdrop of Canberra’s unique planning framework.

How do other places deal with Airbnb?

One of our guest speakers, Natalia Weglarz from Knight Frank, explained how other countries have responded to Airbnb and other short term holiday letting platforms. She discussed how some countries have actually over-regulated Airbnb, and then discovered they had to pull back those regulations. Interestingly, she discussed how some cities have completely prohibited short term letting (eg Berlin), or have at least limited it to a certain number of days per year (e.g. Los Angeles limits Airbnb in a host’s primary residence to 180 days per year, and secondary residence to 15 days per year), or only allowed short-term letting of single rooms instead of whole units (e.g. Barcelona prohibits entire house renting unless it’s a hotel, and Berlin only allows 50% of your apartment to be rented on Airbnb and mandates that the owner should be there too).

On the legal side, Lauren Gray from Meyer Vandenberg discussed how courts and tribunals in other Australian states and territories have responded to Airbnb. In particular, she discussed whether courts and tribunals have characterised Airbnb as a residential or a commercial use. One of the cases which were discussed went all the way to the Western Australia Court of Appeal. In that case, the Court upheld a by-law banning short-term residential letting for a period less than three months1. This was on the basis that ‘residential use’ denotes a ‘settled or usual abode’, and that a unit occupied by someone who merely uses the lot as holiday accommodation or other breaks away from their ‘settled or usual abode’ is not being occupied for ‘residential’ purposes. This case was, however, in contrast with cases in NSW and Victoria where courts have said found it was perfectly legitimate for Airbnb to operate. Some went so far to say that any by-law which restricted a right to let your apartment through Airbnb was invalid2.

Is Airbnb really a problem?

It is important to bear in mind that none of the cases in other jurisdictions are strictly binding on an ACT court, particularly given the unique nature of our property regime. This means it is effectively up to an ACT court or tribunal to decide whether to ban or permit Airbnb, when a particular case is raised.

Our main point of difference here in the ACT is the existence of Crown leases rather than freehold land. At the think tank Deb Barnes from Capital Crown Leasing said that, from a Crown leasing perspective, there was nothing in Canberra’s existing framework that specifically made Airbnb illegal. This means that until either the relevant government authority, or an ACT court or tribunal, decides that short term holiday letting on an Airbnb type platform in fact didn’t fit within our existing residential uses, it is not illegal to offer your home or apartment for rent in that way.

However this does not necessarily mean a ‘do nothing’ approach is best.

Whilst most of those attending the think tank agreed that Airbnb was not really anything ‘new’, because other websites like Stayz have been operating for some time without too many problems, the general consensus was that Airbnb is more unique due to:

  • technology innovations making it easier to rent your apartment out, thereby making Airbnb more prevalent; and
  • the fact that Airbnb is more common in unitised developments such as apartments and townhouses (meaning owners corporations and property managers become involved).

Strata managers attending the think tank indicated that Airbnb caused particular issues for the complexes they managed. They expressed views that more flexibility in the unit titles laws were needed, so that they could more fairly allocate costs and expenses that arose from increased wear and tear on common property and increased insurance premiums from incidents that cause damage.

The increased prevalence of short term holiday letting, coupled with the fact that more and more people are living in apartments, means it is inevitable that frictions will arise… and legal challenges may follow.

Watch this space?

Overall, many who attended the think tank thought that Airbnb was quite positive for Canberra. Indeed, no one had particularly strong views that Airbnb should become heavily regulated or in any way restricted. Most participants were just keen to understand whether there were any legal impediments to it operating, so that they could make sure that what they were doing (or what owners in a complex they managed were doing) was compliant. However, this remains uncertain until such time it is truly tested in a Canberra court or tribunal, or through legislative intervention.

For more information contact the Construction Dispute Resolution Team

Alisa Taylor — Partner
(02) 6279 4444

1 Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104
2 Estens v Owners Corporation SP 11825 (2017); Owners Corporation PS501391P v Balcombe [2016] VSC 384