Further to our recent article about our team’s big NCAT victory in having an owner fined for Airbnb letting and winning a costs order (click here to view), a recent change in laws will have an even bigger impact on stopping short term letting.
In the Estens decision from 2017, the Tribunal invalidated a short-term letting by-law, for breaching s139(2) of the Strata Schemes Management Act 2015 (SSMA), which says a by-law cannot prohibit or restrict the leasing of a lot. Many were critical of aspects of that decision, and it did not set a precedent other NCAT Members had to follow. However, that is all a moot point now. Owners corporations can decide if they want to be a building that allows Airbnb.
Can a valid by-law ban short-term letting?
This answer was not previously clear, but is now emphatically yes. Section 137A of the Strata Schemes Management Act 2015, passed in August 2018 by both houses of NSW Parliament, is at last now in effect.
Section 137A says a by-law may prohibit a lot being used for a short-term rental accommodation arrangement if the lot is not the principal place of residence of the landlord. If the landlord (the person doing the short term letting) does live in that lot, then the by-law cannot stop them renting out one of the rooms.
It’s that simple. The Estens issue of whether a by-law can restrict the leasing of a lot is gone.
What is a short-term rental accommodation arrangement?
The definition is this: short-term rental accommodation arrangement means a commercial arrangement for giving a person the right to occupy residential premises for a period of not more than 3 months at any one time.
An owner might try to argue that Airbnb letting is a residential arrangement and not a commercial arrangement, but that argument is likely to fail. The owners corporation does not have to include a definition, or define the length of the lease. That has been done.
Takeaways
The takeaway is simple. If owners corporations have an issue with short-term letting, they should pass a by-law consistent with section 137A.
Once passed, we have found proceedings for breach of by-law are a better option than proceedings to stop the illegal use, because they are easier to enforce. Alternatively, an owners corporation could commence proceedings seeking both orders. Remember, when running breach of by-law proceedings, the owners corporation must strictly follow the process of serving a correct notice to comply and documenting everything.
If your owners corporation wants advice on short-term letting, or for all other Strata related matters, please contact our Strata team.
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