Short Term Leasing


A lot Australians love services like Airbnb. For travellers, they allow you to easily find affordable holiday accommodation, especially in cities with notoriously high hotel room prices. For homeowners, it provides an easy way to earn a little extra money by renting out your house, apartment, or your spare room for a night or two.

However, before you decide to open up your property for short term leasing, there are some potential downsides you should be aware of.

The idea for Airbnb was born when the founders couldn’t afford the rent for their San Francisco apartment, and decided to turn their living room into a small bed and breakfast to help make ends meet. It proved to be very popular and they took the idea and expanded it. Now, Airbnb has grown to over 1,000,000 listings in 34,000 cities and 190 countries.

Australia has embraced Airbnb in a big way. We are the company’s second largest market and we make up 10% of the company’s annual profits. It’s no secret that Australians are big fans of Airbnb, and other similar services such as Stayz, Tripping or even Gumtree, and there is definitely significant market interest in short term leasing.

Not everyone is a fan though. It’s actually a rather big area of concern for a lot of Body Corporate Committees. Independent Strata Management receives a considerable number of calls and complaints from apartment owners and residents who are frustrated with a neighbouring apartment being rented through Airbnb.

It’s understandable, whether they own the apartment or are renting, residents are paying good money to live in a nice, quiet home. They certainly didn’t expect that one day that would be forced to live next door to an endless succession of bucks nights, parties and holiday revellers. The loud noise, music and partying is going to get very old, very quickly.

The issue is, a lot of these short term tenants don’t really care about their impact on others as they are only there for a day or two. They figure that if it’s just one weekend of noise, people will cope. But when every weekend you have a new group coming through that thinks the same thing, it starts to become a problem. Unfortunately there is very little that can be done when the people causing the disruptions move out the next morning.

There are some Body Corporates that have started to look at ways to address these kinds of issues ahead of time. We know of a number of residential developments in Canberra that have either banned short-term leasing completely or have implemented increased conditions and penalties for owners who rent out apartments to noisy holiday guests.

However, if you’re thinking about making your property available on Airbnb, potentially inconveniencing your neighbours is not the only thing you should be concerned about.

There is also the risk that in your efforts to earn a little extra money, you could be left seriously out of pocket. Airbnb is, unfortunately, open to abuse from unscrupulous users. There have been a lot of reports of people having their apartments burglarised and vandalised by their Airbnb guests.

There was one guy who rented his home to a meth addict who ended up taking his birth certificate, stealing his identity and causing thousands of dollars in damages. There was another person whose Airbnb guests used his apartment to host an orgy and caused $87,000 worth of damages in the process. Only a few days ago the Daily Telegraph reported on a nightmare situation where a homeowner in NSW who rented their property out through Airbnb had their home turned into a makeshift brothel. People within the industry say this kind of thing is also an issue in Canberra, particularly around events such as Summernats.

Obviously, most Airbnb users are good people and this type of behaviour is pretty rare, but if you are unlucky enough to have a bad guest, it could be devastating to find that you’re not covered for any of the damages by your home and contents insurance.

When you enter into an insurance contract, you need to notify your insurer if your circumstances change. Contents policies don’t usually cover your possessions when your property is being used for short-term leasing. Some insurers will cover you during the letting period, as long as you inform them beforehand. Others could view it as a breach of your contract – leaving you with no cover if your guests cause any damages.

It’s also unlikely that your insurance will cover you if your guests decide to steal something. Usually, insurers will require clear evidence of break and enter for a theft claim to be honoured. That evidence is not going to exist if you’ve handed the keys over to the people who ended up robbing you.

Also, if your guests injure themselves on your property, you might find yourself without public liability cover, which could expose you to huge compensation payouts. That’s because your standard insurance coverage isn’t designed to cover business activities.

Now, we’re not saying that you shouldn’t rent your property through Airbnb, or any other similar service. But if you are going to make your property available for short term leasing, you need to be aware of the impact you might be having on your neighbours, and you need to take advice to make sure you are properly covered against any of the risks involved.



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