Legal wrangles over short-term lets in apartment buildings existed long before someone dreamed up web-based services such as Airbnb and Stayz, writes Jimmy Thomson. But the ease and convenience – and “cool” – of renting a room through a website has brought holiday rentals right into the spotlight.
The most basic question when it comes to letting a room in your apartment – or even the apartment as a whole – is whether or not you are allowed to have short-term lets in your block in the first place. Airbnb and other agencies recognise this and ask you to tick a box confirming that you are allowed to let your unit or sub-let your room. But there are several more legal issues.
First among these is your building’s by-laws. If they limit the minimum length of stay of tenants, then you must stick by those rules. Generally, that means anything less than three months is verboten. If you’re a tenant – and more than half the people living in apartments are – check your rental agreement to see under what circumstances you can and can’t sub-let. Those few extra dollars on the side may lead to an eviction notice if you’re in breach of your tenancy.
You may also be in breach of your agreement with the letting agency – remember that permission box you ticked?
Then there are local council zoning provisions. If your building is zoned long-term or permanent residential only, even a by-law allowing short-term lets means nothing. Local council laws take precedence and the special allowance your building has awarded itself means nothing.
Strata laws vary from state to state, so check local conditions. For instance, you can bet it’s harder to run an Airbnb business in Queensland, where high-rise caretakers guard their rental rolls like Rottweilers protect their pups. Moving up the legal ladder, as well as zoning, hosts in newer buildings should look at their development approval. If that says permanent residential only, then you are in trouble.
The concept of short-term letting in apartments may technically only apply to renting out your entire unit. However, even renting out a room in your home while you are living there potentially falls foul of all sorts of regulations, including by-laws and council zoning, because you are now effectively running your home as a business.
And finally, there is the taxman to consider. If you make money from renting out your apartment or spare room, the tax department will want to know about it and take its share. Sure, you can offset costs as a tax deduction, but as soon as you charge part of the mortgage as a cost to your business, you become liable for capital gains tax when you
sell your home. It’s a minefield, which is probably just as well. Otherwise we’d all find ourselves living in quasi-hotels, with holidaymakers cluttering up our foyers, sooner than you can say “room service”.