TENANTS who breach their lease by letting out their rental home on Airbnb could be evicted for sub-letting, under a new ruling by the Victorian Supreme Court.

Photo: iStock/Anchiy

Short-stay letting via internet agencies became a hot topic in Melbourne last week when tenants with a 12 month fixed-term residential lease moved out of their leased apartment and then advertised it on Airbnb.

The judge found that because the tenants had entered into a lease agreement, their conduct in relation to their own tenancy of the apartment did amount to sub-letting, putting them in breach of the ‘additional terms’ provisions of their lease of the apartment. In summary? They were not permitted to sub-let without written authorisation from the landlord or the landlord’s agent.

In his ruling, the judge overruled the decision of the Victorian Civil and Administrative Tribunal (VCAT) and upheld the validity of the landlord’s original application to evict the tenants. The judge ruled that the landlord should be granted possession of the apartment.


A win for landlords and property managers

Rent.com.au landlord services manager Zoran Tomich said that the decision was a win for property managers and landlords everywhere: “This case has generated enormous public interest among property managers and landlords across the country,” he said. “It was looking like every residential tenancy lease in the land would end up being powerless to stop tenants advertising properties on sites such as Airbnb, possibly as short term ‘party pads,’ and risking enormous damage to landlords’ properties with complete immunity.”

Mr Tomich said the VCAT member’s finding also raised concerns amongst real estate agents and landlords that the tenant’s ‘right to quiet enjoyment of the premises’ would be interpreted to mean that tenants should be free to do whatever a property owner could reasonably be expected to do (including advertising the property on Airbnb).

“Normally – and since every state’s Residential Tenancy Act has been in force – that legislated ‘right to quiet enjoyment of the premises’ has been (sensibly) taken to mean that the owner can’t just turn up unannounced whenever they like, or in similar ways, impact on the tenant’s ability to live at the property hassle free. Hopefully this will now not be an issue,” Mr Tomich said.

The crux of the finding

“In order for a lease (or the Residential Tenancies Act) to have been breached, there has to be ‘a lease,’ from which the tenants engaged in sub-letting between them and guests booking through Airbnb.

One defining feature of a lease is that the tenants are granted exclusive possession of the rented premises. The Tribunal member conclude that the Airbnb guests had not been provided with exclusive possession, but merely shared part or all of the rented premises, which was therefore interpreted to constitute a licence, and not a lease.

On that basis, if there was no lease, there could be no breach of the RTA or the tenant’s lease.”

What is subletting?

Subletting is when you let someone occupy part or all of the premises, exclusively or non-exclusively, for some period of time.  Assigning your interests means you sign over the entire lease, for the remainder of the lease term, to the new people (which they didn’t do). This is clearly a separate and distinct act, and different to subletting.

So what does this all mean?

The VCAT Tribunal member’s decision highlighted how ‘legally’ you can find enough ‘doubt’ in any written clause or definition to be able to reach the conclusion that Airbnb – by allowing people to stay a few days at a time, with no real paperwork/signed contracts/bonds/etc between the ‘lessor’ (in this case, the tenants) and the ‘lessee’ (in this case, holidaying guests booking through Airbnb) – did not fit the usual definition of a lease.