AIRBNB, SHORT LETS & THE LAW: ARE LANDLORDS SITTING ON A LEGAL TIME BOMB?

From my experience as a practising lawyer, I have observed that many landlords in Nigeria have been harvesting quick, attractive returns through Airbnb and other short-term letting arrangements. The appeal is obvious: higher yields, rapid turnover, and dependable cashflow, without the complications that sometimes come with long-term tenants. Yet beneath the profitability lies a critical question: are you unknowingly sitting on a legal time bomb?

Short-term rentals, commonly referred to as “short-lets” involve leasing out an apartment, house, or room on a per-day or per-week basis, rather than under the traditional month-to-month or yearly tenancy structure. Platforms like Airbnb have made this model far easier to execute. In Nigeria, the practice has expanded quickly, particularly in major commercial hubs such as Lagos, Abuja, and Port Harcourt. While many landlords now participate, a large number do so without a solid grasp of the legal obligations regulating arrangement. That knowledge gap can transform a promising side hustle into an expensive catalogue of disputes, fines, forced shutdowns, or outright litigation.

The Legal Status of Short-Let Guests in Nigeria

By the operation of law, the short-let guest is typically classified as a “licensee.” As a result, the guest enjoys the right to use the premises but does not receive the same degree of security of tenure that long-term tenants ordinarily benefit from under tenancy laws.
That legal characterisation can benefit landlords in some respects, because it often allows for easier recovery of possession and rent. However, it does not erase the landlord’s obligations. Even where the guest is a licensee, the landlord must still provide the premises properly, respect the guest’s privacy, ensure peaceful use, and, where applicable, honour refund responsibilities triggered by breach or lawful termination. Failure to meet these duties may expose the landlord to liability for breach of contract, negligence, or related claims.

Key Legal Risks Every Landlord Should Know

1. Regulatory and Licensing Requirements

Nigeria does not operate a single, uniform statute governing short-term rentals across the entire country; regulation is largely state-based. In Lagos, for example, short-let apartments are often treated as falling within hotel or hospitality oversight.
Under the Hotel Licensing Law of Lagos State 2003, operators may require a licence to run such arrangements. The Hotel Occupancy and Restaurant Consumption (HORC) Law 2009 further requires registration with the Lagos State Internal Revenue Service (LIRS) and imposes a 5% consumption tax on guests.
In Abuja, short-term rental operations may be subject to a mix of federal and FCT-specific requirements. The Companies and Allied Matters Act (for business registration) and the Recovery of Premises Act (as it affects tenancy and recovery issues) are relevant in practice. Operators are expected to pay applicable taxes to the Federal Inland Revenue Service (FIRS) and comply with Federal Capital Territory zoning regulations, which govern the manner in which land can be utilised. In addition, there are expectations around security screening protocols.
Operating without the required permits, registrations, or tax compliance can trigger fines, penalties, and even forced closure. Local Government Areas (LGAs) may also request additional authorisations to confirm compliance with safety and zoning standards. Informal setups that bypass these requirements tend to breach multiple legal duties, thereby exposing the operator to substantial civil and even in serious circumstances, criminal liability.

2. Estate and Neighbourhood Rules

Many gated estates and homeowners’ associations now either prohibit short-term rentals outright or permit them only under tightly defined conditions. These restrictions are often driven by concerns about safety, security staffing, the management of transient visitors, strain on shared facilities, reduced privacy, and increased community risk.
For instance, in Redeemer Estate, Abuja, security breaches associated with short-let occupants recently triggered a hard ban. If your property is located within an estate that restricts short-term letting, disregarding those provisions may amount to breaching your lease terms, estate covenant, or contractual obligations. The consequences can include enforcement action, penalties, or even the potential loss or impairment of property rights depending on the structure of the arrangement. Before listing your property on any platform, review your title documents, lease agreements, and estate bye-laws.

3. Insurance Gaps: The Hidden Risk

Many standard homeowners’ insurance policies are not designed to cover the commercial realities of short-term rentals. If a guest is injured, suffers medical consequences, or damages the property, your usual policy may refuse responsibility on the ground that you are effectively operating a business.

Platforms such as Airbnb sometimes offer host liability coverage, occasionally up to $1 million for certain claims but that coverage is not an all-purpose substitute. It bears exclusions and limitations, and it is not designed to replace proper commercial insurance. Without the right policy in place, you may be left personally liable for medical expenses, repair costs, and potential lawsuit settlements—costs that can quickly consume the very income you have worked to generate.

4. Mortgage, Leasehold, and Zoning Issues

If your property is under a mortgage, the lender may restrict short-term letting or require prior approval, especially where the lender views the activity as a business use rather than a private residential purpose.
For leasehold properties, the position is often even stricter. Lease terms may require that the premises be used as a “private residence only,” and courts have, in certain circumstances, treated persistent short-term letting as inconsistent with that covenant.
Zoning rules also matter. Areas designated as residential are typically intended for people living long-term as residents—not for a continuous turnover of guests in a manner resembling hotel operations. Without the relevant approvals, you could face enforcement pressure from local authorities or escalating complaints from neighbours, including demands to cease operations.

5. Tax, Safety, and Operational Duties

You must ensure the business is properly registered with the Corporate Affairs Commission (CAC), and that taxes are accurately assessed and paid. Depending on the state and operational structure, this may involve VAT and/or state-level consumption taxes.
Safety is equally non-negotiable. That includes maintaining functional fire extinguishers, ensuring compliant electrical wiring, providing adequate sanitation, and keeping the property clean and habitable. Where you collect guest information, treat it as sensitive; data protection obligations become relevant the moment you touch or handle personal data.
Skip these duties and you are effectively inviting regulatory scrutiny, audits, fines, and reputational damage. And realistically, if the premises are poorly maintained, security is weak, or you fail to deliver on your hosting promises, guests can and often do seek legal redress.

Why This Feels Like a Time Bomb

The short-let market is booming, driven by continuous demand—business travellers, tourists, conference delegates, concert attendees, and short getaways. Landlords are attracted because short-let income can outperform standard rentals. The catch is that the regulatory framework has not always kept pace with the speed of market growth. That mismatch places many hosts in a legal grey zone.
When issues eventually arise—angry neighbours, enforcement notices, sudden bans, injuries, or property disputes—the fallout can be severe. A single major incident, such as a fire or serious injury, can trigger deeper investigations that uncover compliance gaps no one planned for.

I have advised clients who were blindsided by immediate property bans, denied insurance claims, or hit with unexpected tax obligations and penalties. Everyone thinks, “It won’t happen to me”—until it does.

How to Stay Protected and Keep Things Legal

1. Do your homework: Familiarise yourself with the specific rules that govern your state and LGA. Engage a lawyer with expertise in property and hospitality regulation.

2. Get approvals: Identify and obtain the licences and registrations required for lawful operation. Register for applicable taxes and secure estate consent where necessary.

3. Insure yourself properly: Upgrade or purchase an insurance policy that explicitly covers short-term rentals and liability. Platform-provided cover is helpful, but it is not comprehensive and cannot serve as the sole safety net.

4. Document everything: Ensure your booking agreements are clear, accurate, and properly executed. Maintain complete records, and verify that the property meets recognised safety and operational standards.

5. Risk-manage day-to-day operations: Screen guests where feasible, respond quickly to complaints, and take active steps to prevent disturbances to the
neighborhood.

6. Security &KYC: Where required, implement appropriate Know Your Customer (KYC) processes to support safety, reduce fraud risks, and address concerns related to money laundering and unlawful activity.

Short-term lets can be a smart and profitable strategy—but only when implemented with rigorous legal discipline. The law rewards preparation and punishes assumption.

Whether you already rent on a long-term basis or you are considering pivoting to short-term letting, do not wait until the problem finds you. Speak with a reputable solicitor today to understand the current legal position, close compliance gaps, create legal buffers, and protect your investment from avoidable exposure.

Ayokunle Jacob Erin, Esq.
Associate Partner and Practice Group Lead,
Real Estate, Construction, and Infrastructure (RCI)