Signing up as a host for Airbnb Australia is perfectly legal. In fact, it’s a great source of additional income. However, there are a number of rules and regulations you should be aware of before you start listing any properties on Airbnb. 

Regulations tend to vary from state to state, however, for the purposes of this article we’ll focus on NSW laws. 

In the last few years, the laws have been updated to accommodate third party, short term ‘holiday’ rentals such as Airbnbs. In this article, we’ll look at how the regulations affect Airbnb owners. 

We’ll also cover the following:

  • How an Airbnb actually works
  • Whether licensing or subleasing will impact your ability to have an Airbnb 
  • Taxe, insurance and safety obligations 
  • Airbnb management agreements 

How Does Airbnb Work?

Airbnb is a short term rental accommodation. Instead of paying for a hotel, Airbnb guests can pay a nightly rate to rent a house, apartment, studio or cabin. 

An individual who participates in Airbnb by adding their property to the listing range is known as a host. It is up to a host to decide the rate they will charge for their listing. 

Airbnb acts as a third party, where they handle the bookings and transactions through their website. There are no monthly or membership fees. Once guests have stayed, the hosts will receive their payment from Airbnb (as opposed to the guests directly) after an amount has been deducted for using Airbnb’s services. 

What Regulations Will Impact My Airbnb?

Airbnbs are classified as short term rentals. So, all Airbnb hosts must follow the guidelines for the short term rental accommodation industry. 

In 2021, NSW Fair Trading released a guide for short term rentals. It’s important to read through this and make sure your practices are in line with its recommendations to avoid any potential complaints. 

The guide covers matters regarding: 

  • Obligations to the guests
  • Providing information to all Airbnb customers 
  • Duties to the neighbours
  • Handling complaints
  • Enforcement 

Along with the guide, planning laws also impact the way an Airbnb can operate. In NSW, there are restrictions placed on short term leases such as Airbnbs. Essentially, the planning laws dictate that: 

  • In greater Sydney, hosts that are not present can lease their premises for up to 180 days of the year
  • In all other regions of NSW, if the host is not present at the Airbnb, they can lease it all year round
  • If the host is present at the Airbnb, they are able to lease it 365 days of the year, regardless of location 

Laws and regulations can change at any time, so it’s good to keep an eye out for these potential updates. We also recommend looking at local government and planning laws in the area you wish to have an Airbnb, as this will require adjustments on your end.

For more information, visit the Fair Trading website.  

What Is Licensing?

A property licence gives the licensee the ability to use premises for a particular purpose. 

A licensing contract is different to a leasing contract as it does not allow exclusive use of that property. Therefore, if you have a Licence Agreement, it’s important to ensure your contract enables you to host an Airbnb. 

The details of your licensing agreement depend largely on the individual contract, so it’s worth getting a lawyer to review your contract to ensure you’re compliant with its terms as an Airbnb host. 

What Is Subleasing?

Subleasing occurs when a tenant is currently paying rent for property, and they then choose to let a third party use the premises under a sublease. This means the third party would pay rent to the tenant. 

Subleasing can only happen with the permission of the landlord. So, if you’re thinking of putting up a place you are renting as an Airbnb, make sure your landlord has explicitly consented to this. This is where you’d get a lawyer to review your Lease Agreement to determine whether this is possible under your specific arrangement.  

If a landlord agrees to subleasing for the purpose of an Airbnb, we highly recommend getting this in writing – chat to one of our lawyers for a Commercial Sublease Agreement

Do I Need To Pay Tax For Airbnb In Australia?

As Airbnbs are classified as short term rentals, the profits earned from hosting is considered to be tax deductible income. Therefore, you will most likely pay taxes from any money made from Airbnb. 

Other taxes and tax deductions can also be applicable, depending on circumstances such as whether you own the property, if it is a main residence or registered as a business residence and other matters. 

Therefore, it’s paramount to keep records of all income and transactions related to Airbnb, as it will be useful for taxation purposes. 

Example
Claire owns a small cabin in a regional part of NSW. As she does not live there and purchased it as an investment property, she decides to put it up on Airbnb for short term rentals. 

Claire pays income tax on the money earned from the cabin, however, she’s also entitled to landlord tax deductions for property maintenance and also pays GST, as the property is listed for business use.  

What About Insurance?

Making one of your spaces available for others to rent and stay in means that things can go wrong, so it’s important to make sure you’re covered by insurance. 

As an Airbnb host, you may wish to look into getting your property insured in case someone is injured on the property and you are  held liable. 

Insurance is also good to cover instances where damage has been done to the property. The general risk with letting strangers into your premises is that you never know if someone may end up damaging the property. 

It’s crucial to let the insurer you have chosen know  the property in question will be used for Airbnb as this will likely impact the coverage you are offered. 

Safety Obligations

If people are going to be staying at one of your properties, then it’s important to make sure reasonable steps have been taken to create a safe environment. This includes ensuring there are no hazards such as shattered glass, a leaking roof, mould or faulty appliances. 

Additionally, you are required to provide a property that meets safety standards such as having a fire alarm (this is a legal obligation for all properties), extinguisher and instructions on how to operate or care for certain things. 

Again, you might find yourself liable if someone gets injured while staying at your Airbnb so making sure you’ve done everything you can is a proactive way to prevent unhappy guests. 

What Else Do I Need?

Airbnb provides some useful guidelines on running successful short term rentals. They provide information on promoting inclusivity, writing a listing title, hosting an Airbnb and understanding your space. There are a multitude of useful articles and videos on their resource centre – be sure to check them out. 

If hiring a property manager is something you are interested in or you may be a property manager dealing with Airbnbs yourself, then it’s important to have an additional agreement in place. 

What Is An Airbnb Management Agreement?

An Airbnb Management Agreement is a legally binding agreement detailing the scope of work, liabilities and duties of a Airbnb property manager. Property managers usually oversee the general operations and customer needs, ensuring everything runs smoothly. 

As a result, it’s often useful to have a contract that outlines the services of a property manager to cater to all expectations from both sides. 

Key Takeaways

Airbnbs can be a great way to earn extra income. However, it’s important to work within the confines of the law. To summarise what we have discussed: 

  • Airbnbs are short term rental accommodations 
  • In NSW, where you are located and whether or not you stay at the Airbnb premises impacts how many days of the year your Airbnb can be rented out 
  • If you are not the owner of the Airbnb property and have a rental or licensing agreement, it’s important to have permission prior to using it an an Airbnb 
  • Keep records for tax purposes
  • Let insurers know the property will be used as an Airbnb 
  • Make sure all safety obligations have been met
  • If you are a property manager or hiring one, consider getting a Airbnb Management Agreement 

If you would like a consultation on having an Airbnb in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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