Swan v Uecker [2016] VSC 313 is a significant recent authority from the Supreme Court of Victoria which considered whether renting through Airbnb is a leasing or licence arrangement. This Legal Kitz blog post will discuss Airbnb and the Swan v Uecker case.
What is Airbnb?
Airbnb is an online marketplace that connects holiday homes, spare rooms or unaccommodated residences to people travelling or looking for short-stay accommodation within certain localities. Airbnb has become a relatively stress-free additional source of income and a great source for affordable accommodation. For residential tenants, it is very important to check the terms of your lease before using your property to make some extra income.
What is the Swan v Uecker case?
What happened in the Swan v Uecker case? In late 2015, landlord Catherine Swan, discovered that her two leasing tenants Barbara Ueker and Michael Greaves, were listing their two-bedroom St Kilda apartment on Airbnb. On their advertisement, they were offering their whole premises or a single room within the premises for three to five days. However, both tenants were subject to a residential tenancy agreement which included a term that they could not sub-let the apartment.
Prior to Ms Swan’s discovery of the advertisement, she had provided no consent to sub-let the property. The tenants, aware of their agreement terms, argued that because the apartment was their primary residence and they could ask guests to leave, they were not subleasing and only creating a license to occupy. Their claim was aligned with Airbnb website terms at the time which stated:
“Guests agree that a confirmed reservation is merely a licence granted by the Host to the Guest to enter and use the listing for the limited duration of the confirmed reservation”.
Ms Swan responded by attempting to evict them for subletting the apartment without permission and their dispute was taken to the Tribunal. Initially, the Victorian Civil and Administrative Tribunal (VCAT) ruled against Swan agreeing that the tenants were merely providing a licence to occupy. However this was appealed and “an agreement to grant access to the whole premises” was the subject primarily considered by the Victorian Supreme Court. In the conclusion, the court held that both tenants were in breach of their lease through subleasing their rental apartment.
To reach their decision, the court applied traditional principles of land law considering what is ‘exclusive possession’ and what is distinctly considered a ‘licence’. The information present was that guests had full use of the property and there was no evidence that the tenants were able to be accessing the apartment while guests stayed. The fact that it remained their primary residence, it was short-term, there was an online transaction and that they could re-enter after the agreed period of stay was immaterial to the nature of a licence or lease. It was held that the context of the tenant’s arrangement was not analogous to a hotel room because guests were granted full possession as expected under a lease.
What did this mean for Airbnb?
For Airbnb, this did not make their accommodation marketplace illegal, but it did mean that labelling Airbnb arrangements as a licence was not effective. This ambiguity means those intending to stay in a property could be entering a lease which is labelled as a licence changing your rights and responsibilities. For tenants, this displayed the importance of carefully checking the terms of any existing property contracts before making other accommodation arrangements. While positively prohibiting subletting for landlords, those who lease properties should also specifically forbid Airbnb arrangements in future residential lease terms. Making periodic checks of Airbnb may additionally be encouraged to protect your subletting property.
Legal advice
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