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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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Hi Whale
Word from the NSW Dept of Planning & Infrastructure: “The long established practice of short term holiday letting has traditionally played an important role for holiday accommodation in NSW. It contributes significantly to both local and state economies and for the most part occurs without incident… The Department of Planning and Infrastructure is also currently reviewing issues relating to short term holiday letting and how these are addressed under current planning legislation.”
I very much hope they’re not going to ‘fix it’ so that short term holiday letting becomes ‘legal’ across the board! Not only does this blight cripple and buggar up Residential Lot Owners, these bods don’t pay any GST, they don’t have to pay for the infrastructure found in legitimate, purpose-built ‘Tourist’ facilities/properties, thus they effectively undercut legitimate Tourist Operators and deprive us of GST revenue.
Secondly, in your Insurer’s ‘Duty of Disclosure & Policy Statement’ there will no doubt be something along the lines of: “you or anyone doing anything on your behalf must obey all laws.” If short-term letting is considered by your Local Council, the body granting the Development Consent on your building, as an ‘Illegal Use’ – as does City of Sydney Council – then I’d take this to be NOT obeying all laws = your insurer has the right to withhold payment in the event of a major claim.
Say a claim could be worth well in excess of $100 million plus in a large City-based building, where surrounding commercial and other properties are affected, which way do you suspect an insurer would jump? Would they pay up, or simply opt out saying that there was an ‘illegal use’ going on within the building…
Jimmy, I agree with you: If owners/tenants are in residence and they rent out their spare room, this is along the lines of house/flat sharing etc. Same as when friends/rellies come to stay for up to a couple of weeks…building management advised…etc. The problem is when flats are let on a quasi ‘hotel type’ basis with little to no supervision. People ‘checking in’ to our property are constantly amazed to find that people live in the building; they understand it to be a hotel/serviced apartment complex.
Cheers all
Putting on a hat from my past life in insurance claims (ugh), the insurer couldn’t refuse a claim unless there is a specific clause in their policy which prevents an activity and even then if the activity did not contribute to the loss then they have no basis to refuse it. The most they could possibly do is deduct a premium to from the payout IF there was an increased risk because of the activity. So for instance if someone was running a sweatshop in a building with industrial sewing machines and there was damage due to a water leak then there is no basis for refusal of the claim. However if the leak damaged some of the machines etc. then there would be no cover as the policy wasn’t for a business. On the other hand if the sewing machines started a fire then there is two possibilities depending on the policy wording. They deny the claim because of improper use in the building or more likely they pay the claim then recover from the business owner.
Thanks for the advice Stratafied. Very much appreciated.
Latest from the Insurance: “All claims submitted to us will be reviewed accordingly and in line with the policy contract in force between the insurer and the insured.” That’s as far as they will go. They won’t of course guarantee that there won’t be an issue.
Two major Strata Insurance Companies: One rescinded their offer of insurance when short-term lettings were declared. The second issued a policy but with a proviso that a letter had to be sent to all lot owners telling them they had to stop short-term letting. (This hasn’t happened.)
Tucked away in the Insurer’s Policy Disclosure Statement: One has to adhere to ‘any law’. Short-Term Letting in our Residential property is classified as ‘Illegal’.
I really don’t want to be arguing the case, when our building is insured for around $75 million (add contents on top) and other buildings are a laneway away. One can call me a worry wort…
One hears that Melbourne City Council is going back to the Building Appeals Board on this. We’ll wait and see what happens…
Interesting!
Further to the post-script to my #8, I stumbled across this provision in the Strata Schemes Management Act that, depending upon the financial impacts, may convince the Owners of short-term lets to reconsider their position.
77 Effect of use of lot on insurance premiums
If the use to which a lot is put causes an insurance premium for the strata scheme to be greater than it would be if it were not put to that use, so much of a contribution payable by the owner of the lot as is attributable to insurance premiums may, with the consent of the owner, be increased to reflect the extra amount of premium.
Interestingly, the proposed Bill additionally provides for an Owners Corporation to seek Orders for increased contributions in the circumstances (above) if an Owner’s consent is unreasonably refused.
Thanks Whale. Very interesting. It all helps!
In our case:
2011: The Insurer offered us insurance, short-term letting was declared by the OC. The Insurer issued PROVISOS with the insurance:
“..If the Owners Corporation approve such occupancy, then it is the responsibility of the OC to ensure the lot owners comply with all relevant laws and regulations pertaining to this type of occupation. Failure to do so may prejudice a claim under your Policy.”
2012: Insurer – “That the OC take reasonable steps to get offending lot-owners to cease this practice. This would be in the form of a letter to all lot-owners confirming they are in breach of the occupation certificate on their building and as such must not continue to lease their lots on this basis.”
NO ACTION TAKEN BY THE OC
2013: Insurer – “No change to the terms of our Policy.”
Still NO ACTION TAKEN BY THE OC.
Late 2013: Council issues ORDER TO STOP short-term letting, describing it as an “Illegal Use”.
2014: Those short-term letting are disputing Council’s Order – this includes every Executive Committee Member.
I’m not a heavy weight ‘Legal dude’, in fact many would, in line with the Industry in which I work, would put me in the category of a ‘professional air-head’. That said, and considering the above, I’d still very much reckon our Insurance is compromised – full stop