Until now, many Airbnb hosts have flown under the radar. That all they are doing is making a little extra money by renting out a spare room in their home.
But as it becomes more like a short-term holiday letting business, as promoted by Airbnb, Stayx, eDreams and others, it becomes more mainstream and widespread, and the government has taken an interest in regulating it. The NSW Parliamentary Inquiry has now issued its report, and the Victorian Parliamentary Inquiry is currently considering submissions on how to regulate it.
These trends are emerging as the law develops:
- Town Planning Law - If more than 2 or 3 rooms are rented, and if breakfast or cooking facilities are provided, it is a commercial use and a planning approval or a licence as Bed and Breakfast Accommodation is necessary. If a whole house or apartment is rented, planning approval may be necessary either as a separate dwelling on the ‘home block’ or as Serviced Apartment if it is in a strata apartment block.
- Insurance - Renting a room in a home is the same as having a home office for insurance purposes - both are a business use which is not covered by a standard Home Owner policy when it comes to coverage for injuries. It is different for Landlords policies, where coverage is provided for property investments.Malicious property damage is not covered by any policy. Airbnb fills these gaps by providing “Host Protection Insurance” to cover injuries and a "Host Guarantee" to cover property damage by guests.
- Taxation - For income tax purposes, all rents are income and expenses are deductible. For capital gains tax purposes, there may be a partial loss of the main residence exemption because the property has a business use.For GST purposes, GST does not apply unless the use is a commercial use.
- Strata Law - The Courts have ruled that any strata by-law which restricts the use of apartments for short-term holiday letting is invalid. Body Corporates cannot bar Airbnb lettings, but can control noise and damage to the common areas. The rest must be left to the planning authority - the Local Council
For more information about the current status of the law in these areas, click: