A recent High Court decision has clarified whether owners can rent out their homes via Airbnb in subdivisions that restrict “commercial activity”. The outcome may surprise some.
In Cameron Drive Management Company Ltd v Jo-Ann Real Estate Ltd [2025] NZHC 721, a homeowner occasionally rented their holiday home on Airbnb. Other owners in the 14-lot subdivision believed this breached a land covenant, which stated no commercial activity could be carried out on or from a property except for “private homestays”. This exception applied so long as the homestays didn’t affect the neighbourhood’s character or others’ privacy.
The Court was asked to decide whether short-term Airbnb rentals, where the owner is not present, counted as prohibited commercial activity.
Interestingly, the Court found that, while Airbnb hosting is in fact a commercial activity, it did not breach this particular covenant.
The key reason being that the business side of the transaction happened online; that is, off-site. The booking and payment were made via the Airbnb platform, not on the property itself. Once guests arrived, they simply stayed at the house like any other occupant. In contrast, a “private homestay” (which the covenant allowed) typically involves the owner being present and actively hosting.
The Court explained that “private homestays” were known in 1999 (when the covenant was drafted) as situations where the owner stays in the house with guests. Airbnb-style renting, where the owner is absent, didn’t fit that model. But because the owner wasn’t actively running a business from the property during the rental period, there was no breach.
This decision serves as a reminder that land covenants must be interpreted in light of their wording, intent, and context at the time they were created. If you're buying in a subdivision with covenants, it’s important to seek legal advice early on so you understand exactly what they mean and how they could limit what you can do with the property.

