Short-Term Rentals and Land Covenants: What Does "Commercial Use" Really Mean?
26 August 2025

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.

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We're pleased to introduce Zak Nasir , Senior Associate in our Land Development and Commercial Property team. Zak brings a unique blend of legal and planning expertise, helping clients navigate some of New Zealand's most complex property and development projects. With extensive experience in land development, subdivisions, commercial property and resource management matters, Zak advises developers, private clients and infrastructure providers on all aspects of property acquisition, development structuring, subdivision, leasing and disposal. His practice spans projects of all sizes, from boutique developments through to major residential subdivisions involving hundreds of lots. Before becoming a lawyer, Zak worked as a town planner, giving him a valuable understanding of the planning and development process. This background allows him to identify potential issues early and provide commercially focused, practical advice throughout the life of a project. Clients and colleagues alike value his ability to bridge legal, planning and development considerations to achieve successful outcomes. He has previously worked in London as a lawyer and most recently at a large top tier firm in Auckland. Throughout his career, Zak has advised on significant commercial property transactions, large-scale development projects, leasing arrangements and Public Works Act matters. He is known for his pragmatic approach and his ability to work collaboratively with surveyors, engineers, planners and government agencies to resolve complex issues efficiently. Whether assisting first-time developers or experienced industry participants, Zak is committed to delivering clear, practical solutions that help clients move forward with confidence. We are delighted to have him as part of the Glaister Keegan team and look forward to the continued value he brings to our clients and colleagues. Contact: zak.nasir@glaister.co.nz
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