Apartment owner powerless after discovering tenant was illegally renting home on Airbnb

A Sydney apartment-owner who discovered her tenant was illegally subletting the one-bedroom apartment out on Airbnb to four guests at a time, and making triple the rent, has warned other investors that this is a “cancer” that’s spreading fast throughout the city.

Angry at the extra wear and tear on her apartment and terrified that someone might have an accident and she would be liable – especially since the unit was advertised, wrongly, as having a “shared” rooftop – she says this is something that has to be stopped.

“I was appalled,” says welfare lawyer Susan Morgan, who was staying with family in London when she discovered what was happening back home in Sydney. “I’d let my apartment out through an agent to someone long-term who looked on paper as if they were extremely responsible. 

“But instead they were subletting it, making a huge profit at my expense, breaking our building’s bylaws and even more importantly, voiding my insurance.

“What would happen if there was an accident in the apartment? How about if someone went up to the rooftop, which is full of air conditioning units and equipment, and fell off the edge? Who would pay then?”
 
Ms Morgan, 56, had become yet another victim of “phantom” Airbnb leasers – now being dubbed “ghost hosts” – letting their rented units for profits in breach of rental agreements and building bylaws.

Even worse, it can be very difficult to spot, and then to stop. The tenant ignored her emails and carried on regardless and Airbnb refused Ms Morgan’s entreaties to take down the listing, saying it was a private matter between her and her tenant; it had nothing to do with them.

While Airbnb asks hosts to tick a box saying they are allowed to let the property, its policy does not include checking the permission, even when it is challenged by an owner or owners’ corporation.   

“Airbnb is not a party to any booking agreements between hosts and guests … does not manage the availability of such listings, nor does it rent, manage or control the accommodations of the properties that are published by users on the platform,” the company wrote to Ms Morgan. 

It was stalemate, and Ms Morgan was outraged. “I sent Airbnb proof of my ownership of the apartment and asked them to freeze the rental funds as they were obtained through misrepresentation and nothing happened,” she says. “No accountability or responsibility, yet happy to take the money. Airbnb is a real cancer.”

A spokesman for Airbnb Australia says: “We proactively encourage hosts to think carefully about their responsibilities, and request they seek relevant permissions from landlords, building management or government authorities [where appropriate] before listing their home or extra space.”

But lawyer Suzie Broome of Sydney practice Sachs Gerace Broome says that Airbnb’s refusal to take responsibility for ghost hosts when things go clearly wrong puts property owners “at huge risk”. “I could imagine if there was some kind of problem and it came to light to insurers that apartments were being used in such a way, without consent and against zoning rules, then they could void insurances,” she says.

“It must be happening everywhere now, more than we know. It’s something the legislature and legislators aren’t thinking about because they’re looking at a booming economy, and not about the underlings paying the price.”

Real estate agent Craig Donohue was asked by Ms Morgan to intervene and eventually ended the tenant’s lease. “But this is a real problem and landlords have to be really vigilant if they want to avoid this happening to them,” he says.

“I’d recommend checking regularly on Airbnb to make sure their home isn’t listed. The difficulty is you can’t search the site for addresses, but you can look at the maps and make sure your property isn’t pinpointed.”

Ms Broome advises investors to also become more involved with their buildings, make friends with neighbours who can report any unusual activity, and be prepared to work as sleuths themselves, even loitering outside their rented units to check. 

With Airbnb having such a strictly hands-off approach, some holiday let hosts are also being reported as going to extraordinary lengths to get around restrictions on short-stay letting to exploit demand in popular areas.

“There are two buildings side by side on Kent St in the city,” a Sydney building manager told Domain. “One of them allows short-stay letting, the other has a bylaw banning them and actively monitors websites for unlawful advertising of apartments for holiday lets. 

“So the host, who owns units in both blocks, advertises his apartment in the building where it’s OK but meets the guests outside and takes them to the block where it’s banned.”  

However, sometimes the short-stay hosts are too smart for their own good. One Chatswood reader, responding to a story about alternative methods of keeping holiday lets out of apartment blocks says his building has bylaws banning short-stay lets, but one owner, a lawyer, decided to ignore them.

“Our building’s bylaws say no short-term including Airbnb and they have maximum occupancy of two people per bedroom,” says Max who asked us not to use his surname. “One owner of a two-bed apartment, a lawyer, has defied it, putting in a queen bed and four bunk beds in his investment flat.
 
“But now he has egg on his face as the initial overseas holiday let tenants cloned the building swipe in Chinatown for $50-$70, cut the key, and now have short-termers taking the chance to stay one or two nights when its empty and the lawyer gets nothing. Of course he can’t complain because he breached the strata bylaws anyway.”

But such unscrupulous ghost hosts are taking advantage of slack laws and putting apartments and whole buildings at risk, says Ms Morgan.

“I think anyone who rents out their apartment to a tenant is now in danger of this kind of abuse. What stops rogue agents going along with it, and taking a percentage of a listing?” she asks. 

“And even if an owner agrees to allow a tenant to sublet on Airbnb, the rest of the building may not but will still be open to huge insurance risk.”