Airbnb and residential tenancy law : Do ‘home sharing’ arrangements constitute a licence or a lease?

In tenancy law, the distinction between a lease and a licence is fundamental. A lease confers an interest in land; it can be transferred, and confers rights enforceable against all the world. A licence, on the other hand, merely permits a person to enter onto land, or to do something in relation to it, without being sued. A licence can be withdrawn at any time, and it is not regulated by tenancy legislation or property law generally. Although the distinction is well established, characterising particular housing arrangements as involving either a lease or a licence can be problematic. At common law, the existence of a lease depends on whether exclusive possession was conferred on the occupier. Primarily, this involves examining the terms of the agreement between the parties. As leases can be created with little formality, a purely verbal agreement may give rise to a lease. On the other hand, a detailed written agreement may explicitly state that the arrangement is a licence and not a lease. A body of case law exists - in both Australia and the United Kingdom ("UK") - regarding the factors relevant to characterising an arrangement as either a licence or a lease. While these decisions state general principles, they also tend to focus on quite specific factual issues, and accordingly they are not easy to reconcile or apply.