When Is Airbnb Use Considered Unlawful Subletting?
Scully v Atwell (Residential Tenancies) [2025] VCAT 850
Decision date: 25 September 2025
Key issue: Whether using a rented home for Airbnb and other short-stay listings without written consent amounts to unlawful subletting under section 91ZV of the Residential Tenancies Act 1997 (Vic), and whether the refusal of consent to sublet was unreasonable.
Full Case: https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VCAT/2025/850.html
The Background
This case concerned a fully furnished four-bedroom home in Mount Martha.
Within six weeks, neighbours reported that the property was being offered on Airbnb as both a “1-bedroom studio” and an “entire home.” The rental providers discovered multiple short-stay listings online, with one advertising the property for $8,000 per week.
After confirming the use, the owners issued a Notice to Vacate under section 91ZV for unlawful subletting. The renters responded with three separate applications — seeking (1) permission to sublet, (2) compensation for distress, and (3) compensation for alleged repair delays and harassment. The rental providers also sought compensation for forecast losses.
What Did the Tribunal Decide?
Acting Deputy President Campana granted possession to the rental providers and dismissed all other applications.
VCAT found that the renters had both sublet and purported to sublet the premises without consent, by offering it for short-stay accommodation on multiple booking platforms. The Tribunal held that the owners’ refusal to consent to subletting was reasonable, noting that:
The property was fully furnished and the owners’ primary residence when in Australia.
The proposed use would invite unknown short-stay guests, beyond the owners’ control.
Local council laws required a permit for short-stay use, which could not be granted without the owners’ consent.
The renters had a poor track record with subletting and previous VCAT appearances related to unpaid rent and rental disputes.
The Tribunal concluded it was reasonable and proportionate to make a possession order under section 330A, given the renters’ ongoing defiance, repeated breaches, and lack of remorse.
The Compensation Claims
Both sides’ compensation claims failed.
The renters’ claims for distress, surveillance, and washing-machine inconvenience were rejected for lack of evidence and because the owners had not acted unlawfully.
The rental providers’ claims for future losses (legal costs, lock changes, and potential rent loss) were dismissed as premature and unproven.
The Outcome
Possession order granted – renters to vacate by 30 September 2025.
Permission to sublet refused. All compensation claims dismissed.
Key Takeaways for Property Managers
Short-stay listings (Airbnb, Booking.com, etc.) = subletting. Advertising even one room without consent can trigger section 91ZV.
Refusal to consent can be reasonable when subletting increases risk, breaches insurance, or breaches council laws.
Financial hardship of the renter is not relevant when assessing reasonableness of consent.
Fully furnished or owner-occupied properties heighten the risk and justify refusal.
Evidence matters: screenshots, neighbour statements, and council correspondence are key to proving unlawful subletting.
Possession orders will generally be found reasonable and proportionate where subletting continues after notice or hearing.
The Tribunal’s Final Word
The Acting Deputy President noted that granting permission to sublet to “the world at large” through short-stay platforms would be like “throwing a deck of cards into the air and letting them fall where they may.”
