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The Victorian Court of Appeal dismissed the City of Melbourne’s appeal on Thursday 12th December 2013 and unanimously supported Justice David Beach and his Supreme Court decision on the 30th May 2013.
The legal definitions of dwelling and sole occupancy unit are very clearly explained and now law in Victoria.
Genco & Anor v Salter & Anor [2013] VSCA 365 (12 December 2013)
A solid decision for the short stay industry and its future. Common sense prevails.
As an investor who allows short stays in my apartment, this is great news.
Three Judges in Victoria, clearly state that the Building Appeals Board, made an error at law. Short stay is now legal, opinions do not count.
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Another year in Strata Land; and may it be as fascinating and full of camaraderie as possible with good cheer to all.
I’m saddened that those ‘pro’ short-term letting didn’t answer any – not even one – of the questions put to them below.
Living right next to Sydney’s wonderful NYE display, there’s certainly a hangover of sorts here today in our building.
A note left behind on the Caretaker’s desk by the ‘security guard’ employed to keep the peace on the night reads – and this is a chappie who wouldn’t know a Resident of the building if one crashed into him: “The night went very well nothing happen (sic) all ok so nothing to report.”
The decorations from the Christmas tree are strewn all through the foyer. Some of them are broken and have been ground into/all through the carpet.
No ‘Care’taking staff working here today. And not a single EC Member who emphatically supports short-term lets lives here. Did they let so-called ‘residents’ who booked for the night plus their 49 partygoers stay in the buildings in which they actually live? And let’s multiply those ’50-to-an-apartment’ by 55 x short-term let apartments in our block. But how dare I!!
One of these ‘residents’ who’d come for a night warned me: “Careful of this lift – lots of bad vibrations….we had 50 people stay in our apartment last night.” This was on leaving @ 12:25 pm New Year’s Day, with open beer bottle still in hand and crunching through the debris. No wonder our lift has got the jitters. Resident Lot Owners possibly have a touch more than a dose of the jitters to start 2014.
Onwards and upwards and here’s to an interesting year ahead!
I don’t suppose you took any photos of the destruction, did you?
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The answer to this is, of course: ‘yes.’ Though I’m constantly threatened for taking photos.
I’m going to ask for a copy of the security camera footage of the Foyer for last night – that’ll have our EC freaking screaming blood! And of course, their answer will be an hysterical: ‘NO!!!!’
Those who know my little website could look at the page ‘bylaws & useful links’ for a photo or two… Alas my camera is too good for its own good – it does all this auto-light etc correction so the foyer doesn’t look as mucky as it really is.
@Stumped said:
Those who know my little website could look at the page ‘bylaws & useful links’ for a photo or two… Alas my camera is too good for its own good – it does all this auto-light etc correction so the foyer doesn’t look as mucky as it really is.
And the address of the website is …?
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Website is to inform our Lot Owners. It’s really not for general consumption.
And it should be remembered, we’ve got 55 of these short-term let apartments (party flats, especially over New Year, holidays, any/every weekend) in our block, plus management refused an earlier request to control numbers/entry into the building on NYE. It wasn’t just one apartment that was very obviously overcrowded. Really, in hindsight, the Fire Brigade should have been called. One can imaging ‘what if’ in the case of an emergency…
I’ve been ambivalent on the subject of short-term and holiday lettings, but after the experience of the last two (2) weeks where three (3) additional Units in our Plan have been refurbished and for the first time made available for that type of residency, I’m having second thoughts.
In the case of our Plan that brings the total of short-term / holiday rental Units to only eight (8) of our twenty-seven (27), but the comparatively high daily rental rates invariably leads to cost-sharing of Units by a couple of families and to consequent problems with their additional vehicles and boats being illegally parked, including within traffic corridors in the carpark, the improper use of the security access system (as two families are sharing one Unit), the improper use of communal facilities, overloading of our normally adequate garbage facilities, and general issues of poor behaviour and a total lack of consideration for our permanent residents.
A sufficient number of our Owners have this morning sent me a petition to convene a General Meeting to consider either the making of a Special By-Law to prevent short term / holiday rentals, or to charge the Owners of the eight (8) Units and additional fee to cover the Owners Corporation’s additional costs arising from their residents’ (miss) use of the Common Property.
I advised them to include the “or” option as depending upon how Sect 49(1) of the NSW Strata Schemes Management Act is punctuated by the reader, and whether a short-term “permission to occupy” is the same as a lease under a Residential Tenancy Agreement, their preferred option may be considered a restriction on Owners leasing their properties.
If only the equivalent Sect of the proposed NSW legislation was to omit to word “restrict”! That would in my opinion resolve all the issues discussed in this topic, and yet enable Owners to still lease and derive an income from their Units under the provisions of the NSW Residential Tenancies Act – that is for >3 months and on a Lease.
By the way and whilst I haven’t personally verified it, the petitioners claim that one of their number contacted the Managing Agents and five (5) Owners of the Units involved, with no meaningful responses and with one Agent who manages three (3) of those reportedly claiming no knowledge of the industry’s selectively publicised Code-of-Practice for Short Term Rentals.
Three things Whale
1) I’ve been told that short term letting is considered a buisness and generally their is a bylaw that requires approval by the EC for running a buisness from a lot.
2) Short-term letting / holiday accomadation requires different fire standards and so I would have thought you should have some leverage here.
3) Your strata insurance is based on a residential complex and if you are doing holiday lets that is no longer the case and so your insurance premiums should go up (the extra payable by the holiday letting owners).
Good luck.
I’ve spent more than two years on this subject and hope the following will help you NOT repeat the ground I’ve already covered. Firstly, with regards to Kiwi Paul’s comments, which are all logical:
1) I’ve been told that short term letting is considered a buisness and generally their is a bylaw that requires approval by the EC for running a buisness from a lot.
Check with Council: City of Sydney’s ‘word’ on short-term letting is that it is NOT a ‘commercial’. They say:
“If units are being let as short term accommodation, then that would be a use that is characterised as Tourist and Visitor Accommodation which is a use that is different from Residential.”
2) Short-term letting / holiday accomadation requires different fire standards and so I would have thought you should have some leverage here.
According to the Building Codes of Australia, Residential buildings are ‘Class 2’ buildings. Short-term letting is a ‘Class 3’ activity and, yes, Class 2 and Class 3 buildings require very different infrastructure to meet Fire standards/regulations. Melbourne City Council has just lost a case in the VIC Supreme Court when following this line of argument so ‘Forget It!’ for the present.
3) Your strata insurance is based on a residential complex and if you are doing holiday lets that is no longer the case and so your insurance premiums should go up (the extra payable by the holiday letting owners). – See more at: http://www.flatchat.com.au/forum/renters-rants/Supreme-Court-win-for-party-flat-operators/#sthash.iwZwwijq.dpuf
Here’s the screamingly obvious point, though I suspect those doing short-term lets will be absolutely deaf to this, as they are in our Strata. As a member of an Owners Corporation (NSW), you must (legislation) insure your Builidng. You also need to know that you have unlimited liabilty, so in the event where your Insurance Company doesn’t pay a major claim, every single one of you can lose everything you own/possess/have tucked in bank a/c’s and super funds.
In your Insurer’s Duty of Disclosure statement there will be a section along the lines of:
“You must advise Us immediately in writing of:
1. All changes in occupation or circumstances to Your Insured Property.
2. Any change in information or details You have given Us in relation to Your Insured Property or You.
3. Any change that increases the risk of damage at Your Insured Property.”
And
“You must do the following things:
1. Comply with the conditions and procedures set out in ‘The Insurance Policy’.
2. Make sure that anyone doing anything on Your behalf obeys all laws…
4. Take reasonable precautions to prevent anything which could result in a claim under the insurance Policy.
5. Tell Us as soon as possible of anything that changes the facts or circumstances relating to Your Insurance.
So, if your building is zoned by Council as Residential, and you’ve got people doing short-term lets, you are paying your insurance premium – yes, they’re always happy to take your money but you’ve been warned! – but your insurance is BLOWN.
With regards to assistance under the Strata Schemes Management Act (SSMA), the Department of Fair Trading and/or the Consumer Trader & Tenancy Tribunal (CTTT): you’ll get none. My personal opinion is there is a loophole as wide as Sydney Heads and it’s this; according to Fair Trading:
“NSW Fair Trading cannot clarify what constitutes “commercial Purposes” as the Act does not define such a term.”
And
“The Act makes no provision regarding short-term leases or exempting short-term leases from the requirements of Section 119 (of the SSMA – registration of leases on the Strata Roll). As the legislation currently stands Section 119 is applicable to all leases of logs regardless of the duration of lease. This includes short-term leases of one night stays. The Act makes no distinction of leases of a lot and makes no provision that such leases must qualify as a ‘residential lease’ to have relevance under Section 119. The ‘licence to occupy’ description as pur forward by (an) Adjudicator…made in the context of the Residential Tenancies Act 2010, would not exempt a short-term one or two night stay under a lease from the requirements of Section 119.”
And
“There is no minimum term for ‘length of tenancy’ as long as both parties agree to the period (i.e. 2 weeks, 12 months or any other period as agreed by the parties) as long as the purpose of the agreement is for tenancy and not holiday or commercial purposes.”
You can bet that those leasing short-term aren’t complying with the bylaws:
1) To notify the Owners Corporation of a ‘change of use’, ie Tourist/Visitor accommodation, and
2) Under section 119 of the SSMA, notifing the Owners Corporation of all the ‘short-term leases’ they’re issuing, and
3) Not giving their so-called ‘tenants’ a copy of the bylaws for the building.
– – – – –
The ONLY chance of help on this issue is COUNCIL.
You have a legal and moral obligation to do this – legally you have to have your building insured and morally, you and every member of your OC can lose everything you’ve worked all your lives for if something happens and there’s a major claim against you. You’ll be threatened, bullied, your name will be blackened, they’ll probably try very hard to sue you, if you’re in a big scheme you’ll probably get next to no support – absent landlords won’t know/won’t care, etc etc. It’s a very, very tough gig.
Council has issued the Development Consent on your building.
I’ve seen recent Development Consents issued by City of Sydney where they actually state that the property can’t be advertised for stays of less than three months and any lease must be for a minimum of three months.
Older Development Consents don’t have this minimum provision – importantly, it depends on Council’s ‘INTENTION’. Where your Residential building was/is zoned for ‘Permanent Residential Accommodation Only and not for the purposes of a hotel, motel, tourist accommodation, serviced apartment or the like’, the intention was that people use the property as their permanent place of residence. There needs to be the concept of ‘permanency‘. This means, as with some here, that a couple can have a retirment home out of town, and a city home, using their city apartment as their second residence.
When our situation is all ‘done and dusted’ it’ll be appropriate to write a Guide on the subject. I’d do anything to avoid others living what’s been thrown about here.
Get moving, and good luck!
@kiwipaul said:
1) I’ve been told that short term letting is considered a business and generally there is a bylaw that requires approval by the EC for running a buisness from a lot.I think you need to look at the other posts on this topic to see it’s not as simple as that. Defining the difference between a business and the provision of accommodation could keep lawyers in court for months.
2) Short-term letting / holiday accommodation requires different fire standards and so I would have thought you should have some leverage here.
Again, look at other posts – the Supreme Court in Victoria has just ruled that the issue of fire safety is not relevant when considering the legality of short-term lets.
3) Your strata insurance is based on a residential complex and if you are doing holiday lets that is no longer the case and so your insurance premiums should go up (the extra payable by the holiday letting owners).
This may be the case – although I haven’t heard of any examples where that has happened – but if the short-term renters have the influence to stop their owners corp taking action against them, they would generally be able to approve the payment of the higher premiums.
Whale’s scheme needs by-laws stating that all rentals have to be for a minimum of three months and occupancy of dwellings should be limited to two adults per bedroom — that would shut out the holiday lets.
However, with eight out of 27 units holiday lets, he will find it hard to get the 75 percent vote required to pass the by-law. The best bet may be to look at council zoning and then get an order from the CTTT to stop all holiday lets as they are in contravention of a superior law.
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Jimmy, your comment in ‘Parking thieves: some strategies’ is so very interesting.
Could the same thing happen…review of Local Government Act AND Strata Act…on short-term letting?
There’s got to be a way that we can come at the Short-term Letting parasites – sounds like we need a pincer movement?
Maybe it’s time to start putting pressure of the NSW Minister for Local Government – Don Page?
An update on my post #22.
Our EGM to consider Motions to only permit the rental occupation of Lots in the Plan under the provisions of the NSW Residential Tenancies Act (2010), and to additionally limit the numbers of adult occupants in any Lot to the numbers of bedrooms X 2 was held last night.
The Motions were discussed at length and at time quite emotionally, but with 22% of those in attendance then voting against the proposal, it was specially resolved (passed); just!
Even though I’ll now draft and Register the Special By-Law (SBL) in the terms resolved, I have my doubts about its ability to withstand a challenge at the NCAT by affected Owner/s, as even though the previous short term / holiday rental of Lots was on the basis of a “permission to occupy” as opposed to a Residential Tenancy Agreement, in my opinion our SBL will still restrict Owners’ ability to lease their Lots and thereby be in breach S49(1) of the SCMA.
On the basis of the discussions at the Meeting, any challenge will I suspect depend upon the income affected Owners will now derive from a permanent rental as opposed to from a short term / holiday occupancy.
Nonetheless I’d be most interested to receive some advice about the legality of what we’re doing.
Congratulations Whale on the passing of the by-law!
I’m about to put forward a Motion along the same lines, even though I suspect it will be resoundly defeated.
I’ve been down the Dept Fair Trading Mediation and CTTT Adjudication ‘road’ – if history repeats itself, you will get absolutely nowhere there. No assistance was forthcoming to us.
Under the present legislation – and I don’t believe there are plans afoot to address this gaping hole in the legislation – there is absolutely no minimum to what is considered a Residential ‘lease’.
Will be watching this matter with great interest.
Cheers
Stumped – Yes, you’re right about no minimum term being applicable to Agreements under the NSW Residential Tenancies Act (RTA), and that’s why it doesn’t apply to some types of occupancies including short-term / holiday rentals.
We’re hoping though that by requiring that all occupancies be under the provisions of the RTA that short-term / holiday rentals will be automatically precluded, that the use of the term “lease” in Sect 49(1) means one issued under the RTA, and that if the matter ever gets to the NCAT we’re not seen to be “prohibiting or restricting” Owners’ ability to lease their Lots.
As I said, it all hinges upon the monetary return that Owners involved achieve from the permanent occupancy of their Lots as opposed to from short-term / holiday rentals, and from the figures floated at the Meeting the difference is marginal (slightly favouring the former), and that just might keep me out of the NCAT.
PS – I omitted to mention that prior to the EGM I e-mailed our Insurers to ascertain what if any impacts to our Policy would arise from the short-term / holiday rental of 8/27 Lots. Their written response was that whilst we needed to advise them of that style of usage and occupation (and we then hadn’t), there would be no impacts if and until a ratio of short-term / holiday lots to the total lots in the Plan was exceeded. Interestingly our Insurers declined to reveal what that ratio was, and I gained the impression that it was somewhat arbitrary.Whale 1330hrs 31/01
Hi All,
This makes no sense to me at all. I was under the impression that these types of leases were illegal?
In my lot we are recently having owners using some type of website called air bnb. Do you know this? They are renting out spare rooms, space etc.,
Loads of strangers in the building and no communication to either OC, SM, EC so as usual no communication to the residents or people who actually live on the property.
Peed off
CBF
I wrote about this HERE a few months ago and there was considerable discussion stemming from that HERE.
My personal view is that if the resident is still there when the guests visit, then there’s not much harm. However, if they are using the service to get guests for an empty unit, it’s a short-term let.
Others may have less liberal views.
By the way, something else that hasn’t been raised is house swaps, when the resident clearly can’t be in residence when the guests arrive.
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