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Merry Christmas Jimmy.
The Privy Council decision (the O’Connor decision) from the Turks and Caicos Islands (the well known tax haven) is a real game changer.
I have carefully studied the O’Connor decision and am confident that it gives the green light to residential strata schemes to pass a valid by-law to ban Airbnb style holiday lettings of less than 30 days.
I have written a detailed article – Can a strata by-law restrict Airbnb style holiday lettings? A new legal decision is a game changer – which readers can google. But here is a summary:
In the O’Connor decision, the Privy Council said that the strata law restricting leases must not be read in absolute terms. Reasonable restrictions can apply. In this case, it was reasonable to ban short-stays of less than one (1) month because they are a holiday use, not a residential use, and are therefore incompatible with a residential strata scheme.
Although the O’Connor decision is not binding upon the Courts and Tribunals in Australia as a precedent, it will be able to be referenced to validate strata by-laws which ban short-term rentals of less than one (1) month in strata schemes in residential zones for these reasons:
The Privy Council decision in O’Connor was made by a Board of 5 Law Lords, who are the most senior judges in the UK. They decided on the equivalent of the Australian Strata Law and applied the common law. Their judgment must be given considerable weight.
The WA Court of Appeal decision in Byrne must also be given considerable weight. It upheld a strata by-law restricting short-stay rentals to no more than 3 months in any 12 month period.
The NCAT Tribunal decision in Estens v Owners Corporation SP 11825 [2017] NSWCATCD 63 must be given very little weight, being a decision made by an Administrative Tribunal, not by a Court. The Tribunal struck down a strata by-law which banned the lot being used by its occupants on a short-term basis for less than thirty (30) days in a residential strata scheme.
The O’Connor decision means that the Estens decision is now bad law.
It also means that this advisory in the NSW Fair Trading Booklet Strata Living is wrong:
“Strata laws prevent an owners corporation restricting an owner from letting their lot, including short-term letting. The only way short- term letting can be restricted is by council planning regulations.” (at p. 28)
It is my firm view that in the future, Australian Courts and Tribunals will almost certainly apply the O’Connor decision to uphold strata by-laws which ban short-stay rentals of less than one (1) month in residential strata schemes.
Conclusion
The O’Connor decision is a game changer: With a properly drafted strata by-law, an owners corporation / body corporate can restrict Airbnb style holiday lettings of whole apartments in residential strata buildings by imposing a one (1) month minimum stay requirement.
For the record, the text of the strata by-law in the O’Connor decision was:
“Each Proprietor shall: …
• Not use or permit his Residential Strata Lot to be used other than as a private residence of the Proprietor or for accommodation of the Proprietor’s guests and visitors. Notwithstanding the foregoing, the Proprietor may rent out his Residential Strata Lot from time to time provided that in no event shall any individual rental be for a period of less than one (1) month …
• Not use or permit to be used the Strata Lot or any part thereof for any illegal or immoral purpose, nor for the carrying on of any trade or business other than periodic renting or leasing of the Strata Lot in accordance with these by-laws unless such trade or business activity has been approved in advance by the Executive Committee in writing, which approval may be revoked for cause.”