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Fair Trading has spoken – whispered, really – but the message is clear: the key to controlling holiday lets within strata buildings lies with local councils.
Whether or not that will change with the imminent release of a discussion paper leading to new laws on short-term letting across NSW, remains to be seen.
But concerned residents – tenants and owners – and conspiracy theorists alike will note the timing of a recent and unannounced change to Fair Trading’s Strata Living handbook.
Spotted by an eagle-eyed Flat Chat reader, the following paragraph slipped in quietly to the section on holiday letting.
“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.”
So does this mean you can’t currently have a by-law banning Airbnb? Yes and no.
The general opinion is that you can’t have a by-law that bluntly bans short-stay letting; but you can have a by-law that says owners must abide by local council zoning. If your building is zoned residential only, it amounts to the same thing.
In fact, if you don’t want holiday lets in your building, you should have that by-law because your local council isn’t going to do anything about holiday lets any time soon. However, if you have a by-law, you can take the miscreants to the Tribunal and get them fined.
So I wouldn’t wait for your local council to do the heavy lifting. The simple fact is that with the exponential growth of short-term letting in relatively few areas (the ones where tourists want to stay, d’uh!) the affected councils don’t have the resources to police it or any additional revenue from it.
However, it seems every other day there is a new study showing that in the areas where holiday letting is most prevalent, it is pushing up rents and crushing rental availability – hence the push for new laws and the resulting scramble by the global agencies to make sure their ability to make a motza out of turning your homes into de facto hotels is not curbed in any significant way.
Anyway, all of that is just my view. Meanwhile, while we wait for the discussion paper to land, you can download the Fair Trading handbook here. And the debate continues about what kind of short-term letting by-law you can have. That’s HERE.
Also there is the usual cavalcade of disputes, from the minor to the monumental, on the Flat Chat forum.
- Neighbours have joint responsibility for repairing the fence between them. One wants a like for like replacement, the other wants to “upgrade” to Colorbond. The committee is split. Who decides? That’s HERE.
- What do you do when your strata manager sacks your building? That’s HERE.
- Can a committee ban security bars on ground floor windows. That’s HERE.
- How apartments can get in on ‘free’ electricity from solar power. That’s HERE.
- And a very grumpy JimmyT lets fly at “bush lawyerism”. That’s HERE.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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Thanks JT.
To add some info from various Qld legal perspective which may (or may not) be relevant to NSW see below from Hynes Legal:
https://hyneslegal.com.au/news/can-aqueensland-body-corporate-stop-airbnb-nar-439
and from Hopgood Ganim Lawyers:
There have been several Qld Tribunal decisions on the subject of short term letting. Precedents have been set. I don’t believe that NSW Tribunals yet have had the opportunity to deal with this subject in such a substantial way as Qld has. Whether NSW Tribunal decisions go the way of QLD … only time will tell.
Tribunals in Qld have generally relied on the plain English meaning of ‘residential purposes’ to include any types of residential purpose, including short and long term letting and permanent residency. It has been held that limiting the type of residential use of a lot to only long term letting or permanent residency is contrary to the BCCMA.
Various solicitors in Qld have expressed the view that short term letting (including in the context of Airbnb and Stayz) is a type of residential use.
In Qld the ordinary meaning of ‘residential use’ appears to be to distinguish use of the unit as a dwelling from use of the unit for commercial or industrial purposes, rather than to distinguish between the length of stay.
One Adjudicator stated ” People holidaying in a unit would be the occupiers of the unit and be putting the unit to a ‘residential use’, even if they only had a short term lease. Also, even if the owner of the unit was running a commercial enterprise involving the letting out of the unit, the people holidaying in the unit would be putting the unit to a residential rather than a commercial or industrial use.”
The metaphorical ‘genie is now out of the bottle’ in Qld. It will interesting to see if the NSW ‘genie’ can be contained.
NSW Fair Trading has a standard by-law which covers the need for Owners to comply with all ‘laws’ applicable to your building. Just Fair Trading and ask for a copy – there you will have the approved/accepted wording.
Back in early 2016 the Deputy President of the NCAT, Stuart Westgath, wrote that short-term letting was a matter for Local Councils and that the Tribunal had absolutely no authority over matters of Planning. So, go back and check the Development Approval on your building. In NSW Strata it is normally crystal clear what is/isn’t approved when it comes to short-term tourist/visitor lets.
One need only look at buildings such as Sydney’s Maestri Towers and Bridgeport to understand what short-term letting in residential buildngs/neighbourhoods means. The NSW Land and Environment Court has consistently judged mixing the two ‘uses’ as “fundamentally incompatible”. Those who’ve been forced to live in neighbouring properties to STRs call it a “living hell”. Note well: Airbnb and other STR operators are running programs in the US etc whereby they are seeking to control entire apartment blocks.
You can go to the NCAT and, under the Residential Tenancies Act, get Orders declaring the Airbnb/other short-term letting agreements ‘non-residential tenancy agreements’ – see sections 7 and 8(h) of the NSW Residential Tenancies Act. Apply, not as a Landlord/Tenant, but as the ‘Other’ person. Box provided…just tick it. A precedent has been set, so there should be no argument against this. You must make application for against each Owner – don’t attempt to roll together several owners and don’t apply against the letting agent/platform. You are seeking orders against the owner in your building.
Also check your mandatory building insurance policy: a Term of Condition will usually read that ‘all laws governing the building must be complied with’. If not, the insurer has the right to withhold payment in the event of a major claim. So if you have owners short-term letting, they are not complying with the Development Consent.
Once you have the Orders from the NCAT, then hit the owners with Orders to Comply for not advising a ‘change of use’ and compromising your mandatory insurance policy.
Councils should be mandated to enforce their zoning. Owners have done due dilligence when they bought into Strata/Residential Suburbs. Ministers in NSW are being asked what compensation will be paid if they alter legislation which will see buildings/suburbs zoned residential converted to hotels/transit zones.
Meanwhile a City of Sydney staffer volunteers that Council will investigate STRs in a building where Council obtained Court Orders bannng the practice, and then when documents are sent providing details of new listings, the CEO marks the correspondent as vexatious.
Hope this helps.
Millie – I hope that you are correct but I am confused about the relevancy of the Residential Tenancies Act in this situation considering that the Office of Fair Trading seem to imply that the Residential Tenancies Act does not apply to short term holiday letting.
My confusion stems from this extract from their site:
“To avoid coming under the general tenancy laws of NSW the property must ordinarily be used for holiday purposes or if not, rented for periods of no more than 3 months for the purpose of a holiday.”
And from the Fact Sheet from Tenants NSW – Information, Advice and Advocacy. See the last bullet point which I have highlighted in bold for emphasis.
“Who/what the Act does not cover
- People who own a home and rent a site in a residential park are covered by the Residential (Land Lease) Communities Act 2013. (see thenoticeboard.org.au for factsheets)
- ‘protected’ tenants under the Landlord and Tenant (Amendment) Act 1948
- residential aged-care or respite-care premises
- serviced apartments, hotels, motels and backpackers hostels
- hospitals and nursing homes
- club premises used to provide temporary accommodation
- premises used mostly for the purpose of trade, profession, business or agriculture
- holiday parks occupation agreements
- retirement village residence contracts
- refuge or crisis accommodation agreements
- boarding and lodging agreements (see Factsheet 14: Boarders and lodgers)
- agreements giving the right to occupy residential premises for no more than 3 months for a holiday.”
Hi Lady Penelope
Hope the following assists. Assuming you get Orders under the NSW Residential Tenancies Act (not the Strata Act), one could then issue an Order to Comply under the standard by-law on ‘Change of Use to be Notified’. Then also check the terms of the mandatory building insurance policy. All Strata Committees are obliged to advise their Insurer of any such “Illegal Use” – City of Sydney’s quaification of this type of letting. (In our case, our Strata Committee refuses to act against those currently short-term letting despite our Land and Environment Court Orders), claiming that short-term letting isn’t a strata issue – which it obviously is):
NSW Strata buildings – quoting just one of many Determination of Development Approvals of which I know. It’s important to check the exact wording on the DA:
“The development must be used for permanent residential accommodation only and not for the purpose of a hotel, motel, serviced apartments, tourist accommodation or the like, other than in accordance with the Residential Development Policy for the City Centre, adopted 12 August 1993…All units approved for permanent residential accommodation must be either owner occupied or occupied by a tenant with a residential lease under the Residential Tenancy Act, 1987. A certificate signed by the owner or the body corporation…or a solicitor…must be forwarded to Council…every 12 months, certifying that all units approved for Residential Development are either owner occupied or a subject to residential leases under the Residential Tenancy Act…”
NCAT Orders against Airbnb letting agreements: RT 15/37925, D Charles Tribunal Member 22/06/15: “The Tribunal notes that as between the respondent and those occupying his premises under short-term tourist or visitor agreements the Residential Tenancies Act 2010 (RTA does not apply: see, particularly, section 7 and section 8(h) of the RTA.
NCAT Orders against Wotif/Bookings.com/etc, etc letting agreements: RT 15/37922, D Charles Tribunal Member 22/06/15: “The Tribunal notes that as between the respondent and those occupying his premises under short-term tourist or visitor agreements the Residential Tenancies Act 2010 (RTA does not apply: see, particularly, section 7 and section 8(h) of the RTA.
Quoting from the NSW Residential Tenancies Act:
Section 7 Premises to which Act does not applyThis Act does not apply in respect of the following premises:
(a) premises to which the Landlord and Tenant (Amendment) Act 1948 applies,
(b) premises used to provide residential care or respite care within the meaning of the Aged Care Act 1997 of the Commonwealth,
(c) serviced apartments, that is, buildings or parts of buildings used to provide self-contained tourist and visitor accommodation that are regularly cleaned by or on behalf of the owner or manager,
(d) premises used as a hotel or motel,
(e) premises used as a backpackers’ hostel,
(f) a hospital or nursing home,
(g) any part of a club used for the provision of temporary accommodation,
(h) premises used for residential purposes, if the predominant use of the premises is for the purposes of a trade, profession, business or agriculture.
Section 8 Agreements to which Act does not apply:
(h) an agreement made for the purpose of giving a person the right to occupy residential premises for a period of not more than 3 months for the purpose of a holiday,
Hello Millie
Wouldn’t [s8(h)] RTA 2010 preclude a person from seeking an Order against short term letting agreements through the RTA Tribunal? Short term letting agreements are not within the jurisdiction of the RTA 2010.
Our 245 lot scheme in NSW, has the following DA condition (2006) –
“Residential (for the purpose of this consent) means the use of apartments for residential purposes, including leasing under the requirements of the Residential Tenancies Act 1987, and does not allow for the use of apartments for short-term stay, tourism or serviced apartments”
Our bylaws and insurance state our scheme must abide by all Council and other regulatory requirements.
To date, we have closed down three STR in our scheme by quoting the above. Whether our action against STR will stand up in a tribunal/court is yet to be tested.
Hi Puddn
Keep it quiet: should any of your owners challenge you and you take them to the NCAT, the NCAT will dismiss any request or Orders to ban their STRs. One owner in an apartment block in Sydney’s Ultimo has challenged his OC and the NCAT has reported that the OC is powerless to stop him (or a ‘her’).
It must be understood: the Development Approval is granted by the Local Council and it is the Local Council’s responsibility to enforce it’s DA/Planning/Zoning legislation.
There is one case in NSW where the Council failed to act and after years of “sever” impact, the neighbours took the matter to the Land and Enviroment Court. Click here. This case law makes for excellent reading.
Cheers
Hoping this helps – this is what I found on the NCAT’s Website in July 2016. I sent this message to various other strata lot owners so have been able to retrieve it. Perhaps someone with a legal background could take a look and help with advice.:-
“It appears that someone has challenged a Special Short-Term Letting By-Law through the NCAT and won.
So for those in Strata, is it back to Local Government – who issued the DA – and, as per submissions and statements made under oath to the NSW Parliamentary Hearing Committee, practically every Local Government has a moratorium on taking any action whatsoever against those short-term letting:Holiday lettings
The order making power which an Adjudicator has under sections 157 and 159 of the Strata Schemes Management Act 1996 provides a means of redress where the original by-laws are changed in a way that may lead to an injustice.A high-rise apartment building leasehold scheme located in Sydney’s Darling Harbour was managed by a large hotel group for some time, and a number of lot owners had made their apartments available for short-term holiday leases through the hotel group.This situation changed when the hotel group vacated the building and an extraordinary general meeting of the owners voted to adopt a special by-law to prevent short-term leases and serviced apartments. The special by-law prohibited the use of lots for commercial or retail purposes, including the use of lots as serviced apartments or short-term rentals.A lot owner made an application for Adjudicator orders to repeal or invalidate the special by-law under section 157 or 159 of the Act, so that they could continue to lease their apartment to tourists and visitors.The owners corporation’s written submission stated that the use of serviced apartments and short-term leases created security, health and safety issues as well as adversely affecting the general amenity of the building.Section 159 of the Act allows an Adjudicator to set aside a by-law if the owners’ corporation did not have the power to make the bylaw. However, section 49 of the Act also provides that a by-law cannot prevent any dealings relating to a lot.The Adjudicator considered that the new special by-law led to restrictions that were not compatible with section 49, and was therefore outside the by-law making power of the owners corporation pursuant to section 159 of the Act. The Adjudicator also considered section 157 under which a special by-law can be repealed if it is considered that it should not have been made having regard to the interest of all lot owners in the use and enjoyment of their lots.As the owners corporation did not provide any explanation or evidence in support of their statement, the Adjudicator was not convinced that the adoption of the special by-law was necessary for the good management of the property. Orders were made declaring the special by-law invalid.”Millie said – There is one case in NSW where the Council failed to act and after years of “sever” impact, the neighbours took the matter to the Land and Environment Court. Click here. This case law makes for excellent reading.
That case was won by the complainant against STR – so doesn’t that support the argument that Council DAs could be upheld?
Puddn – The case that Millie has mentioned is Dobrohotoff v Bennic [2013] NSWLEC 61. The complainant won the case on the grounds that the dwelling was being used as a ‘party house’ by large groups of people and was not being used in a way that a ‘family’ would use the house.
The Court held that a tenancy granted to persons residing in a group situation for periods of up to a maximum of one week for the purpose of “bucks and hens nights, parties or for the use of escorts or strippers is not consistent with a use or occupation by a family or household group in the ordinary way of life and therefore not consistent with the use of the property as that of a ‘dwelling-house’”.
‘Party houses’ in suburbia are only a small proportion of the short term rental market therefore the D v B case has limited precedent for most other short term rentals such as those in strata schemes. It could be argued that strata schemes already have by-laws that deal with the subject of parties, overcrowding, noise, and nuisance.
Gosford has since changed its LEP and now permits short term rentals as exempt development in certain circumstances.
JimmyT said:
“…a former hotel that had several floors in an apartment block. And weren’t the operators shut down by City of Sydney, anyway?”
My understanding was that the ‘several floors’ were still zoned residential. And, as in the case in the building in which I live, after the City of Sydney shut down the STRs, only four months or so later, up they’ve sprung again and the City won’t do anything about it.
The written advice I have from the NCAT’s Deputy President Stuart Westgarth was clear: The NCAT will not deal with matters of Planning. This is a Local Government issue. (A 1,200-page Submission to the CTTT/NCAT documenting every aspect of short-term letting in our residential building, including the breach of insurance terms and conditions was dismissed.)
Puddn/Lady Penelope, the critical elements from the Dobrohotoff v Bennic case law is this judgements:
“(The Respondent) readily agreed that she could not guarantee compliance with the House Rules or the Code of Conduct.
…the harm caused to the environment is not limited to the undermining of the planning regime. The adverse impact on the amenity and wellbeing of the (Residents) has been, as the evidence overwhelmingly demonstrates, severe.
By leaving it to the Court to determine this important issue, the council, by its inaction, has, in my opinion, failed to fulfill its core functions and has failed its constituents.”
Pudd, for matters Strata, there are numerous case law examples, links to which can be found here. Of most help to us (in my opinion) is the 187 Kent Street and appeal. In these two judgments you will see where the City of Sydney set out for the Court the arguments of why mixing short-term tourist/visitor accommodation – serviced apartments – with permanent residential occupants is “fundamentally incompatible”. The judges agreed with these arguments.
To date, in all instances where the issue of short-term letting in a residential environment has been brought before the NSW Courts, the Judges have agreed with the concept of “fundamental incompatibility”. (I’m currently in Canada, meeting with other anti-STR campaigners. The Courts in Ontario recently came to an almost identical judgment.)
Our argument: all due diligence is (supposedly) taken when purchasing into residential property which, for many, is the largest investment one undertakes. Our titles are over residential property. Why then should legislation be retrospectively changed to alter our living environments, forcing us to reside in hotels/transit zones? What compensation should there be for such a change in our living standards? Plus, how will all levels of legislation, from the Building Codes of Australia, Fire & Rescue, Disability Discrimination legislation etc be dismantled across every form of ‘occupation’ from hotels to backpacker lodges, to facilitate Airbnb and every other unlicensed accommodation ‘booking platform’? Is the entire accommodation Industry to be deregulated, or just those who penetrate our housing and will those who have gone to the expense of installing BCA Class 3 grade infrastructure and paying commercial rates also be compensated?
Let’s now see what JimmyT gets by way of a response from the AG and Matt Kean’s Offices. The question was asked: Did the NSW Parliamentary Hearing Committee seek/obtain legal advice Legal Advice during their Inquiry into the adequacy of legislation covering short-term letting in NSW? The response received was: “No.”
One can/should argue that NSW has ‘world’s best’ legislation; local councils should be mandated to enforce the legislation. Plus: how can any government ignore the housing crisis engulfing not only Sydney but regional centres from Tweed to Albury? NSW has lost 58,250+ homes to Airbnb/Expedia alone with literally hundreds of other platforms/agents offering our homes to tourists/visitors from every country except Syria, Iran, North Korea – while residents are robbed of access to these homes unless they’ll pay the hugely inflated prices charged to tourists.
Residential Housing is for housing Residents.
Thank you Millie. For the patience to provide an in-depth explanation.
My committee struggles to get its head around it all, but we soldier on hoping that common sense will eventually prevail.
We are muscling up for a fight (defence (?) against a change of current zoning) if needs be, so forums like this are enormously helpful.
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