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Aqua – To help clarify your situation can you please provide us with the actual wording of the Renovation By-law for your building? NB:The By-law should set out all the requirements for obtaining approval for a renovation.
Please also tell us the anticipated date of your next AGM? If you do not know then contact your Strata Manager and ask.
As scotlandx has already stated in Comment 3, there are several issues involved in your current problem. If you are going to the Tribunal then you may as well have the Adjudicator sort them all out together.
Millie – The case law example where a material change of use was successfully argued based on the facts that the short term rental house was: used for bucks and hens nights and stripper parties; with rental durations of a week or less; and in which the owner did not use this property for their own holidays, is actually the NSW case that you have mentioned: Dobrotoff v Bennic.
However, a material change of use will not apply to every short term rental. This was made clear by the Judge in Moore v SSCLG and Suffolk Coastal District Council [2012] EWCA Civ 1202 at [19] which was cited by the Judge in D v B at [43] and which stated:
Whether a building is a “dwelling-house” is a question of fact and degree. Subject to any requirement of permanency, there are a number of situations where buildings may be “dwelling-houses” even though they are only occupied infrequently. A holiday house that is used exclusively for a limited amount of time during the year by a family (or even time shared between several families) or a house owned by a company that is rented out to executives and their families for short durations may all nevertheless constitute “dwelling-houses” (Moore v Secretary of State for Communities and Local Government [2012] EWCA Civ 1202 at [19]).
The Judge in D v B reiterated the principle that these cases are all a matter of fact and degree. The outcome of D v B may have been different had the facts been different and the degree of usage as a ‘party house’ been much less.
It was always common ground that a dwelling house (i.e. a residential home) need not be occupied all the year round – a second home is still a home. A second home rarely used by its owner and sometimes put to commercial use will in many cases not cause a material change of use.
Along with the degree of usage, the character of the use of the house and the effect of that use on the character of the area remain important indicators of when a material change of use may have occurred.
To make assumptions that every short term rental will trigger a ‘material change of use’ claim and that every short term rental will result in a poor outcome for the strata scheme is possibly flawed. These assumptions may result in loss of support for your cause from the large numbers of owners who are only infrequently utilising their underused second homes as short term rentals (see the example in Moore). These ‘mum and dad’ owners do not want to have their homes trashed by unsavoury types and would probably be more careful who they let stay in their home.
The real struggle is against those owners who never stay in their second homes and chose to short term let these apartments 100% of the time to anyone who will pay the price, isn’t it?
In New South Wales, planning and development activities are carried out under the Environmental Planning and Assessment Act 1979 (NSW). The legislation creates a complex system of state, regional and local planning.
From my understanding ‘a material change of use’ as defined in the Environmental Planning and Assessment Act 1979 (NSW) is not the same as the ‘change of use’ mentioned in the model by-law. The wording of the by-law has unfortunately created unnecessary confusion.
‘A material change of use’ is a legal term where the character of the use of property must be shown to have been changed substantially.
A case where ‘material change of use’ has been successfully prosecuted involved a situation where a residential property was let out by the owner to non family groups who had the intent of having hens and bucks parties and who stayed for less than a week. The property was not occupied by the owner throughout the year.
A case where ‘material change of use’ has not been successfully prosecuted involved a situation where a house was being occupied by: the owner for holiday periods, by the owner’s friends and by the owner’s staff on a non-paying basis, with, superadded to that, a period in the aggregate of 10 weeks in the year during which it was let as a rent to single households.
Model By-law 17, if it was to be adopted by the strata scheme, does not provide much relief to strata schemes that want to prevent short term accommodation. All By-law 17 provides is that notice must be given to the OC by the Lot owner who plans to rent out their property in this way. There is no provision in By-law 17 for the OC to refuse a Lot owner’s notice.
However, it may be possible for relief to be obtained by the OC in claiming ‘a material change of use’ if it could be shown that the particular Lot had accumulated a substantial number of By-law 17 notices AND that the tenants are using the Lot in a way that is antithetical to how a family would use the Lot AND that the owner did not use the property.
Millie – I agree. This is an extremely complex issue which cannot be resolved by a ‘one size fits all’ solution.
One of the reasons why this issue is tricky is that there is case law which indicates that short term rentals do not necessarily trigger a ‘material change of use’. Therefore Councils cannot ban them in every instance.
Each scenario is different. For example, some apartments have a mixed usage. This includes: use by the owners for some of the time, and the owners family for some of the time, and the owners friends for some of the time, and short term tenants for the remainder of the time.
Other apartments are rented out 100% of the time as short term rentals with 0% usage by owner.
Questions to be asked by Councils when considering this issue are whether the character of the use of the strata dwelling as a residence has been changed so substantially by the short term tenancy as to amount to a material change of use.
It is a question of fact and degree in every case. The answer will depend upon the particular characteristics of the use as short term accommodation.
The position that: any use of premises as short term accommodation is materially different to a use as a single dwellinghouse because it is not a use of the premises as “the long term home” of persons comprising a household, has not been supported in case law.
Kangarookiwi – Good idea to check with your strata building insurer and fire regs to ascertain whether short term rentals will cause a financial impact. Both are burdens or costs that are able to be proven (or not) in an objective way.
The wear and tear argument is something that will be more difficult to qualify and quantify. Wear and tear depends on many factors that can not often objectively be attributed to short term rentals. Unless it is proven it is therefore subjective and a much weaker argument.
GeorgeM – The strata manager lobby group is very strong in Qld. Remuneration and length of contracts is quite different from NSW.
Management Rights
Management rights refers to the holder of the Caretaking and Letting Agreements. NSW also has management rights and in similar fashion to QLD but with one key difference; length of term.
In Queensland it’s possible to enter into a Caretaking and Letting Agreement for an accommodation module building for 25 years.
In NSW management rights terms across all schemes are limited to 10 years.
The difference is a quite staggering amount of money and that has allowed the Queensland Management Rights industry, holders and traders of these contracts, to flourish and become significant stakeholders in the QLD body corporate industry. (Extract from “How Different is Queensland Body Corporate Legislation” MyBodyCorpReport.com.au
I live in Qld and have just had my renovation approved by the Body Corp committee as per the by-law instructions which also included submitting a structural engineer’s report. I also had to sign an indemnity form against damage to the building and the common property as a result of the renovation.
I would suggest that you request that the committee draw up an indemnity form that you could sign as an extra precaution. That should satisfy the Owner’s Corp. If that is refused then you could claim that the OC are being unreasonable and take this matter further through NCAT.
Unless you are changing your front door then I don’t see how an internal renovation should impact on the common property fire regulations for the building? Both are not related in my opinion… but I could be wrong.
Depends on experience I guess. I may be wrong but the remuneration could be up to $90K. Why don’t you check on these types of job vacancy ads online?
For a small expense on your part it is probably best for you to take this to VCAT. Unfortunately some OCs would rather stonewall when it comes to compensating owners and admitting to maintenance and repair responsibilities.
It is difficult for us to fully assist you without seeing your plans and defects.
With regard to the strata manager – the strata manager is obligated under the Act to take direction from the OC committee and the OC.
I agree that you should take this issue up with NCAT.
Without personally seeing the by-law, and relying on your interpretation of it, the by-law appears to be unreasonable. It does not appear to comply with either the SSMA or the usual LEPs.
In the intervening period until this matter is sorted out with NCAT you should enter into a 6 month Lease with your tenant or guest as required by the by-laws but you and the tenant can either:
(1) agree to include a ZERO break fee clause in the additional terms of your tenancy agreement, and/or
(2) agree to end the Tenancy Agreement at any time if you and the tenant mutually agree.
To fulfill the requirements of the by-law all the OC needs to know is that a 6 Month Lease is in place.
The OC should have no input into the additional terms of the lease that you and your Tenant have personally entered into. You can consecutively enter into as many of these 6 month Leases as you require.
The Tenancy Agreement Form is here:
https://www.fairtrading.nsw.gov.au/pdfs/tenants_and_home_owners/residential_tenancy_agreement.pdf
If you disagree with a by-law or find that a by-law is unreasonable then you have the option to propose a Motion that amends the by-law and/or clarifies the by-law. If your Motion receives the necessary support at a General Meeting by Special Resolution then the by-law must be changed.
Below is an extract from the NSW Office of Fair Trading site regarding by-laws:
Owners corporations can determine the by-laws that suit the preferred lifestyle of the strata scheme. A by-law must not be harsh, unconscionable or oppressive. No by-law is capable of restricting a dealing in a lot, including restricting short-term letting. By-laws cannot restrict children, and cannot restrict the keeping of an assistance animal. (My emphasis added).
See SSMA 2015 Sections 139(1) and (2) for restrictions on by-laws that may be relevant to your situation.
If you firmly believe that the OC’s definition of a short term lease is inconsistent with SSMA s139 or any other Section of the SSMA, or Act or law (including local council laws and regulations) then you can use SSMA 2015 Section 136(2) to contest, avoid or negate the effect of the by-law.
The issue of short term leases is causing immense confusion and has yet to be properly resolved by the relevant authorities. On one side of the argument the NSW Civil and Administrative Tribunal issued an Order that stated an agreement by airbnb does not constitute a residential tenancy lease, and on the other side of the argument the NSW Land and Environment Court issued an Order for the City of Sydney that banned short term tenancies in residential buildings.
Getting the definition of “short term accommodation (tourist accommodation)” correct and reasonable will go a long way to resolving all of these issues.
NB: Some zoning definitions from the Sydney LEP 1996 and from 187 Kent Pty Ltd v Council of the City of Sydney [2007] NSWLEC 88 (2 March 2007) which unfortunately still do not address the definition of long term accommodation and short term accommodation:
mixed-use development means a building or buildings in which two or more uses are carried out.
residential accommodation in Central Sydney means a building or part of a building that provides permanent or long-term accommodation, and includes residential flat buildings, dwellings, boarding houses, hostels, student accommodation and the like.
serviced apartment in Central Sydney is a form of tourist and visitor accommodation and means a building or part of a building that provides self-contained accommodation which is serviced or cleaned by the owner or manager of the apartments or the owners or managers agents.
fred11- From my reading of the SSMA 2015 I could find no requirement for 21 days notice to introduce new By-laws. The only requirement is that at least 7 days notice must be given of the meeting Agenda. The Agenda would of course need to contain the Motion regarding the by-law changes.
141 Procedure for changes to by-laws
(1) An owners corporation may, in accordance with a special resolution of the owners corporation, change the by-laws of the strata scheme.
(2) A change to the by-laws of a strata scheme has no effect until:
(a) the owners corporation has lodged a notification with the Registrar-General in the manner approved by the Registrar-General, and
(b) the Registrar-General has made an appropriate recording of the notification in the folio of the Register for the common property.
(3) The secretary of the owners corporation must keep a consolidated up to date copy of the by-laws for the strata scheme.
(4) A notification cannot be lodged in the Registrar-General’s office more than 6 months after the passing of the resolution to make the by-law.
Meeting procedures are described in Schedule 1 of the SSMA 2015. The relevant provision is here:
7 Notice of general meetings other than first AGM
(1) This clause applies to general meetings other than the first annual general meeting of an owners corporation.
(2) Written notice of a meeting must, at least 7 days before the meeting, be given to each owner.
(3) Notice of a meeting must also be given, at least 7 days before the meeting, to each first mortgagee or covenant chargee on the strata roll if an item on the agenda is one in which the mortgagee or covenant chargee may cast a priority vote.
Note : A priority vote may be cast in the circumstances set out in clause 24.
(4) Nothing in this Part requires an owner to give notice of a meeting to himself or herself.
sonido – Here is some information that you may find useful regarding Tribunal Rulings that have both denied or confirmed the Owner’s Corporations rejection of an application to keep an animal:
https://www.qbmstrata.com.au/wp-content/uploads/2016/01/BylawsOnline-Pet-FAQ.pdf
Animal owners have had their applications rejected based on the time that the animals will spend alone within the Lot. See https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCTTT/2008/1069.html?stem=0&synonyms=0&query=%20NSWCTTT%201069%20(4%20June%202008)
Perhaps this could be an argument that your strata scheme may use, particularly if the students will be away from the Lot for a significant part of the day, and the animals are young.
See also: https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCTTT/2003/778.html?stem=0&synonyms=0&query=title(Engelman%20near%20Owners%20Corporation%20)
The person who is being given special permission to park on common property should perhaps be obtaining a license to do so from the owner’s corporation. This generally involves: approval at a general meeting; and for a limited period of time; and generally also requires a fee to be paid to the owners corporation for this privilege. If the owner’s corporation wants to dissuade people from applying for this type of extra parking privilege then the license fee could be set very high.