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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!