In New South Wales someone has challenged through the NCAT a special by-law restricting the short-term letting of apartments. The extract from the NCAT’s website can be found below.
A Submission was lodged with the NSW Parliament by the former Chair of the Owners Corporation Network to amend Section 49 of the Strata Schemes Management Act (SSMA) so that 75% of owners could introduce a by-law blocking or permitting short-term letting. Details can be found on the NSW Government’s website link:
Should the Government accept this recommendation, the opposing residents could see their residential building converted overnight into a quasi-hotel, should they not have the numbers to block the investor owners wanting to short-term let. After all, more money can be made from tourists than tenants, and if you’re an investor living elsewhere, who gives a fig about the residents in-house and the destruction of their home lives and the peaceful enjoyment of their Lots?
Another submission has been lodged with Parliament – it cannot be seen on the Government’s website as the papers are deemed confidential. The Submission has also been given to senior advisors within the Department of Fair Trading, requesting that the Act be amended to allow Owners Corporations to introduce a by-law with the stipulation that the by-law be in keeping with the residential status contained in the development consent on said building. When asked for a reason as to why a by-law would be required, the response given was: The NCAT will not act to stop short-term letting plus no tenant taking a lease on an apartment ever gets to see the terms and conditions of a Council issued Development Consent on a building. And, a copy of all by-laws should, under the terms of the SSMA, be given to all tenants within seven days of any lease being issued so no tenant will be left with the argument that they didn’t know they couldn’t short-term sublet.
At Local Government (Council) Level, it seems that Councils across the State have taken the liberty of establishing a moratorium on the issue of short-term letting – many Council representatives have admitted this to State Parliament – and are not taking any action against breaches of Planning/Development Consents. NSW Land and Environment Court Decisions, or lack there of, confirm as much.
Shoalhaven Council estimates that in many areas between 70-80% of its residential housing is short-term holiday lettings of some sort, and Byron Council hasn’t provided stats on their holiday housing, despite being asked frequently to do so.
Depending on whether you love or detest short-term letting, readers will have their preferences for how they want their Parliamentarians and Legislators to respond to the requests for changes to the legislation covering by-laws and the ‘use of Lots’.
I’m not a lawyer – any ‘legal eagles’ might care to volunteer their interpretations on this issue?
Here’s the NCAT ‘case study’. Hoping this helps. Also hoping it doesn’t depress you beyond words:
Holiday lettings
The order making power which an Adjudicator has under sections 157 and 159 of the Strata Schemes Management Act 1996 provides a means of redress where the original by-laws are changed in a way that may lead to an injustice.
A high-rise apartment building leasehold scheme located in Sydney’s Darling Harbour was managed by a large hotel group for some time, and a number of lot owners had made their apartments available for short-term holiday leases through the hotel group.
This situation changed when the hotel group vacated the building and an extraordinary general meeting of the owners voted to adopt a special by-law to prevent short-term leases and serviced apartments. The special by-law prohibited the use of lots for commercial or retail purposes, including the use of lots as serviced apartments or short-term rentals.
A lot owner made an application for Adjudicator orders to repeal or invalidate the special by-law under section 157 or 159 of the Act, so that they could continue to lease their apartment to tourists and visitors.
The owners corporation’s written submission stated that the use of serviced apartments and short-term leases created security, health and safety issues as well as adversely affecting the general amenity of the building.
Section 159 of the Act allows an Adjudicator to set aside a by-law if the owners’ corporation did not have the power to make the bylaw. However, section 49 of the Act also provides that a by-law cannot prevent any dealings relating to a lot.
The Adjudicator considered that the new special by-law led to restrictions that were not compatible with section 49, and was therefore outside the by-law making power of the owners corporation pursuant to section 159 of the Act. The Adjudicator also considered section 157 under which a special by-law can be repealed if it is considered that it should not have been made having regard to the interest of all lot owners in the use and enjoyment of their lots.
As the owners corporation did not provide any explanation or evidence in support of their statement, the Adjudicator was not convinced that the adoption of the special by-law was necessary for the good management of the property. Orders were made declaring the special by-law invalid.