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Our Strata Executive Committee has raised the following issue to stop AirBnB guests staying in our building in its recent minutes from the latest Executive Committee Meeting:
“Short term leasing. This matter was discussed at length and it was noted that the Sydney Council is currently carrying out an investigation into short term leasing. The second point was that the current Council restrictions for residential buildings are a minimum 13 week lease term. It was resolved that at the next General Meeting to propose a by-law restricting short term leasing such as Airbnb.”
Under the STRATA SCHEMES MANAGEMENT ACT 1996 s49(1) there are restrictions on by-laws that can be implemented:
Specifically, s 49(1) states:
“(1) By-law cannot prevent dealing relating to lot.
No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage, or other dealing relating to a lot.”The relationship between a host, AirBnB & guests takes the form of a lease.
Restricting a lease by implementation of a by-law appears to contrary to STRATA SCHEMES MANAGEMENT ACT 1996 s49(1).
Therefore, such a by-law cannot be implemented.I am correct in this interpretation?
Please note, we are not aware of any problems that have arisen with AirBnB guests staying in the building (only about 3 apartments host out of approximately 140 apartments in the building, although there are many other forms of short term leasing taking place in the building and have been for the last 15 years).
Caveat: The building was built around 1980, so does it come under the STRATA SCHEMES MANAGEMENT ACT 1996?
Thank you kindly for your input with regard to the above question.
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Addendum to my post – The article is
The law is catching up with short stay Airbnb style accommodation in Australia
link –
https://www.lexology.com/library/detail.aspx?g=23d8ada1-db1b-4470-8ff5-d9641da604ce
I have also published a case note about the recent Victorian decision handed down on 22 July about an invalid strata by-law regarding sahort-term lettings –
Cour finds that strata owners in Victoria cannot make rules to prevent the use of an apartment for short-term lettings
link –
https://www.lexology.com/library/detail.aspx?g=afc7e814-5184-4323-b378-ab45a1c37c87
Worryingly, the Victorian decision referred to NSW law and pointed out that NCAT can overturn anti short-stay by-laws. Several lawyers have said that is unlikely but, as Millie pointed out (above) they have already done so and have publicised this on their own website.
They might not do this in every case but it would certainly be worth multi- apartment owners (about one-third of Airbnb hosts in Sydney) having a spin of the NCAT chocolate wheel.
I realise that this is a very specific case – a former hotel converted to strata units, – but here again is the relevant NCAT case study.
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.
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In my Flat Chat column in Domain, I jokingly said if you asked six lawyers you’d get seven opinions. Well, our good friend, strata lawyer David Bannerman has passed on these thoughts from Special Counsel Mark Pollinger:
I have attached links to Victorian VCAT and Supreme Court decisions relating to AirBNB. AirBNB is not a party to the proceedings and the proceedings involve an owners corporation attempting to stop various lot owners subletting through AirBNB. Their significance is that they cast doubt on the validity of a by-law restricting leasing through AirBNB.
The Supreme Court decision:
- decides the case against the owners corporation on the basis that it lacked power to make a by-law restricting letting.
- considers the New South Wales legislation and expressly suggests (p82) that section 49 may invalidate a by-law purporting to restrict short-term lettings.
https://www.austlii.edu.au/au/cases/vic/VCAT/2015/956.html
https://www.austlii.edu.au/au/cases/vic/VSC/2016/384.html
In my view, this has little application to New South Wales and is not persuasive authority for a proposition that a by-law restricting short-term lettings would be invalid. In particular:
- As to owners corporation powers to make by-laws, there are significant differences between New South Wales and Victoria.
In New South Wales, owners corporations have broad powers to make by-laws, but subject to some restrictions, including section 49. In fact, the New South Wales case law suggests that owners corporations may make by-laws in relation to almost anything, unless specifically restricted.
https://www.austlii.edu.au/au/cases/nsw/NSWSC/2006/537.html especially paragraph 37.
In Victoria, owners corporations may take only make by-laws in relation to specified matters and the case was decided on the basis, i.e. the owners corporation had no power to make the relevant by-law and it was unnecessary to consider any restrictions, such as a section 49 type restriction. In any event, Victoria does not have an equivalent of section 49, so the comments in relation to our section 49 were at most obiter dictum.
https://www.austlii.edu.au/au/legis/vic/consol_act/sa1988153/s27e.html
https://www.austlii.edu.au/au/legis/vic/consol_act/oca2006260/s138.html
https://www.austlii.edu.au/au/legis/vic/consol_act/oca2006260/sch1.html
2. The New South Wales was case law also suggested section 49(3) should not be read literally and does permit some scope to regulate leasing. However, it does suggest that transactions be prohibited on the basis of some reasonable criteria, as opposed to being prohibited outright. For example, an outright ban on short-term letting might be invalid, while a by-law prohibiting a transaction lacking requisite development consent or requiring compliance with behaviour/amenity standards might not. We need further case law to be sure, but it remains my view that there would be good prospects of defending a by-law of the latter type.
https://www.austlii.edu.au/au/legis/nsw/consol_act/ssma1996242/s49.html
https://www.austlii.edu.au/au/cases/nsw/NSWSC/2006/537.html especially paragraph 54.
https://www.austlii.edu.au/au/cases/nsw/NSWCTTT/2012/425.html especially paragraph 2.
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Looking again at the NCAT decision (above) which DID overturn an anti short-term letting ban, we have to bear in mind that the building was previously a hotel and the Member said the owners didn’t put up a convincing argument.
However, it shows that given the right circumstances and the wrong member, by-laws can be overturned.
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JimmyT
Your suggestion is spot on. We have more and more sex workers setting up shop and this would cover their activities as well those sneaky little individual Airbnbs which are creeping in:
The New South Wales was case law also suggested section 49(3) should not be read literally and does permit some scope to regulate leasing. However, it does suggest that transactions be prohibited on the basis of some reasonable criteria, as opposed to being prohibited outright. For example, an outright ban on short-term letting might be invalid, while a by-law prohibiting a transaction lacking requisite development consent or requiring compliance with behaviour/amenity standards might not.
Our development approval is crystal clear on what is permitted. All other types of letting obviously fall outside the the requirements of the DA. (Only problem is: those who control our building are the old short-term letting cohort and they block everything put to them.)
And Members of the NSW Parliament want to adopt what they’re calling the ‘Melbourne Model’ for short-term letting ie, three complaints and the ‘offender’ is no longer allowed to short-term let in a residential building.
The question was asked: who sets the benchmark for ‘proof’ and how is it applied and enforced? No response provided. A wee problem could soon get a whole lot worse.
Having sent a 1,200-page documented submission to the CTTT, followed by a second submission, again with lengthy documentation, to the NCAT, wboth submissions were dismissed as unsubstantiated.
What hope has one got?
@Millie said:
And Members of the NSW Parliament want to adopt what they’re calling the ‘Melbourne Model’ for short-term letting ie, three complaints and the ‘offender’ is no longer allowed to short-term let in a residential building.Haven’t seen this anywhere. Is this the report we’ve been waiting for?
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Word around town is that the recommendations to Parliament are due any tick of the clock.
I’m scared.
In QLD the by-laws (i.e. strata laws) cannot be changed to exclude short term rentals. An Adjudicator’s Order of Sept 2016 found that a by-law such as that would be void. The Adjudicator based the Order on the following BCCMA legislative provisions:
[s180(3)] If a lot may lawfully be used for residential purposes, the by-laws can not restrict the type of residential use.
And
[s180(4)] A by-law can not prevent or restrict a transmission, transfer, mortgage or other dealing with a lot.
Examples—
1 A by-law can not prevent the owner of a lot from leasing or mortgaging a lot.
2 A by-law can not prevent the sale of a lot to a person under or over a particular age.
The Adjudicator made this comment: “Adjudicators have consistently held that by-laws which attempt to prevent the short term letting of lots (including where there are local government or building classification concerns regarding short term letting) were invalid.”
@proudsceptic said:
In QLD the by-laws (i.e. strata laws) cannot be changed to exclude short term rentals. An Adjudicator’s Order of Sept 2016 found that a by-law such as that would be void. The Adjudicator based the Order on the following BCCMA legislative provisions:[s180(3)] If a lot may lawfully be used for residential purposes, the by-laws can not restrict the type of residential use.
And
[s180(4)] A by-law can not prevent or restrict a transmission, transfer, mortgage or other dealing with a lot.
Queensland is another planet when it comes to strata so this doesn’t surprise me at all. Interesting though that airbnb is starting to sue authorities that try to restrict their $30 billion business. So much for sharing and caring.
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