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Following the extended discussions on the validity of by-laws that set out to restrict short-stay letting by invoking the residential-only status of some apartment buildings, we contacted fair Trading to see if they stood by their comments last week.
They do. This is what a spokesperson for Innovation and Better Regulation Minister Matt Kean wrote in reply:
The Strata Schemes Management Act 2015 (s139 (2)) states that a by-law cannot operate to prohibit or restrict a transfer, lease, mortgage or other dealing with a lot.
Further, S136 (2) provides that any by-law that is inconsistent with the Act or any other law has no effect. If a Local Environment Plan (LEP) allows STHL, a by-law seeking to prohibit STHL has no effect and cannot be enforced.
The model by-laws under the current Act include by-law 18 (1) which states the owner or occupier of a lot must ensure that the lot is not used for any purpose that is prohibited by law.
With the introduction by some councils of LEPs that refer to STHL, and in some cases require development consent for that activity, a number of questions arise as to the interaction between LEPs and strata laws.
Model by-law 18(1) will only apply if the owners corporation has adopted the model by-laws or have the same provision in their own by-laws. Note: schemes are required to consider whether or not to adopt the model by-laws at the next AGM following the introduction of the new laws. This could take up to the end of November 2017 for all schemes to decide.
By-laws are subject to the Act and cannot operate to prohibit a lease or other dealing with a lot. Model by-law 18 therefore cannot operate to prohibit the lease of a lot.
If a LEP requires development consent for STHL, ensuring compliance with the LEP is a matter for the relevant council.
You can read here what six experts on strata law said earlier this week.
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It is interesting, that following the posting of the six opinions, for which those who gave them are to be congratulated for being prepared to do so, and of which only one went along with the Fair Trading published opinion that all by-laws restricting letting are invalid, that now a spokesman for the Minister for Innovation and Better Regulation has in effect rubbished the five that did not agree with the Fair Trading line.
To this non-lawyer the reference in the Amanda Farmer opinion to the WA Court of Appeal decision in the Byrne case was instructive in relevant case law. The 50 page PDF of that decision is at Benchmark with the link on the June 16 edition to a PDF of the decision on the page 2 in the “Summaries With Link (Five Minute Read)” section 2 under Byrne v The Owners of Ceresa River Apartments Strata Plan 55597.
It made interesting reading. It seems to this non-lawyer that whether or not a residential building has adopted Model By-law 18 is irrelevant and, basis this WA decision a NSW by-law would be adequate to stop short-tern Airbnb lets in a residential strata building if just worded say as – A lot owner and any occupier to whom the owner grants occupancy rights may only use the lot as a settled or usual abode and not otherwise.
To make it clear all the NSW Government would need do would be to add a provision – to the effect that notwithstanding section 139 (2) a by-law can provide that lots may be only be leased as an occupiers usual residence.
It seems the matter of whether an owner has local government approval to short-term let or not is irrelevant and a by-law restricting a letting other than as a persons usual abode or residence would be OK under the general Section 136 by-law making power to make by-laws in relation to the management, administration, control, use or enjoyment of the lots or the common property and lots of a strata scheme.
It seems it was held a by-law that is not actually a prohibition on leasing or other dealing with a lot, in terms of section 139 (2) that provides a by-law cannot operate or prohibit the leasing of a lot, is OK if it just restricts the leasing of a lot to use as a usual residence but does not to prohibit or make a leasing conditional on the approval of the Owners Corporation.