Airbnb laws up in the air

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The Watergate building in Melbourne's Docklands

Chaos for short-stay hosts as Supreme Court rules, legislation stalls and minister resigns

The whole future of who can rent out their Melbourne home to short-stay guests is up in the air this week with Victorian Supreme Court ruling against Airbnb hosts who sub-let their unit and the Minister behind legislation to allow short-term lets in apartment blocks resigning from cabinet.

On Friday (June 10) the Victorian Supreme Court ruled that letting your rented home on Airbnb was technically sub-letting – meaning tenants would be in breach of their leases and could be evicted for doing so.

This overturned a previous decision by the Victorian Civil Administration Tribunal (VCAT) that a short-term let on Airbnb was a license, rather than a lease, and therefore was not sub-letting.

Meanwhile an amendment to the Owners Corporation Act that gave tacit approval to short-term lets in apartments has stalled in Parliament, having failed to be voted on, despite being listed for debate on Wednesay (June 8) this week.

And to add to the chaos, Jane Garrett, the Minister for Consumer Affairs who promoted the Bill, has resigned from the Victorian cabinet over the Government’s handling of the Country Fire Authority (CFA) services wage dispute.

Minister Garrett had proposed an amendment to the Owners Corporation Act that effectively allowed apartment owners to let their entire units for short stays of less than seven days.

However the Bill allowed for penalties for by-law breaches and damage to common property and even compensation if the short-stay guests disrupted residents rights to peace and quiet.

Short-term lets could also be banned in properties that were breached three times in a two-year period.

However, critics have pointed out the difficulties of pursuing absentee owners and, especially, their guests after the matter – especially since letting agents would be specifically exempted from liability.

In prime areas, landlords can make up to three times a week from short term lets what they would get in normal rent.

There were also concerns that VCAT, which has ruled in favour short-stay letting in other major decisions, would be the arbiter of whether there was disruption, what the penalties, if any, should be and whether it merited compensation.

In any case, with Garrett gone, it remains to be seen but the amendments to the Owners Corporation Act may have followed her out of the door. No one from the Government was available to comment.

Short-stay letting via internet agencies has become a hot topic in Melbourne with VCAT also ruling previously that owners’ corporations couldn’t create rules or by-laws preventing short -term lets.

This specifically overturned rules in the notorious Watergate apartment block in Docklands which had become a by-word for weekend lets to bucks and football parties, with the attendant disruption to permanent residents’ lives.

Apartment owners are up in arms over the apparent lack of concern over complete strangers being allowed to use their homes as if they were hotels – but without the oversight and safety measures that hotels enjoy.

“Since our launch in December the We Live Here movement has gained a lot of momentum, with more than 110 buildings and 300 individuals from the greater Melbourne area  and beyond already signed up,” chairwoman Barbara Francis told Flat Chat last month.

“At last doors are starting to open for us. It’s been a great beginning, but we will know we’ve made progress when the legislators really start talking to us.”

Meanwhile a spokesman for Airbnb was disappointed by the Supreme Court ruling on sub-letting, telling Fairfax Media that the case showed current laws and leases were difficult to understand and outdated, with many written before the rise of “house sharing” or even the internet.

“If two court judges can come out with two different outcomes, how can everyday people stand a chance of interpreting the rules?” said Dylan Smith, Airbnb’s head of communications for Australia.

Mr Smith added that Airbnb was working with the Victorian government to regulate its business, but more needed to be done.

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