Written by In the case of Swan v Uecker [2016] VSC 313, a Victorian landlord leased a two-bedroom to tenants under a residential tenancy agreement. However, the landlord subsequently discovered that the tenants had been advertising the apartment on Airbnb at a rate of $200/night.
Justifiably, the landlord served a notice to vacate on the tenants under the Residential Tenancies Act, and when the tenants refused to vacate, the landlord applied to VCAT for a possession order. At first instance, the tribunal found that the Airbnb guests did not have exclusive possession of the apartment and that the legal relationship between the tenants and those Airbnb guests was a licence to occupy, not a lease, and thus that the tenants had not sub-let their tenancy.
On appeal, the Victorian Supreme Court reversed the decision of the Tribunal held that the characterisation of an agreement as a lease or licence depends on its proper construction, looking to its substance and not form and having regard to relevant surrounding circumstances. The Tribunal had erred in concluding that the Airbnb guests did not have exclusive possession. The Airbnb agreement was a lease between the tenants and the Airbnb guests for the period of occupation agreed between them, and by entering this agreement, the tenants had breached the terms of their lease. The Court said that the quality of the occupancy of the guests was not akin to that of a ‘lodger’ or hotel guest, but was the ‘exclusive possession’ that would be expected of residential accommodation generally.
This case demonstrates the essential characteristics of a lease which distinguish it from a licence, and usefully illustrates how a breach of a lease can warrant its termination.