State of Origin – Short Term Letting

So, we’ve had State against State and mate against mate, now we have short term letting State of Origin!

It now seems that the Tribunals and Courts have weighed into the equation. The question in reality isn’t around whether it’s a good or bad idea, it’s whether an owners’ corporation or bodies corporate has the right or power to control it, restrict it or totally prohibit it.

Back in 2017, we wrote about the developments on the issue in Western Australia, which built upon the first “real” case in Victoria. Let’s take a look back.

In 2015, the “Mexicans” in the Victorian Civil and Administrative Tribunal (VCAT) in the decision of Owners Corporation PS501391P v Balcombe (Owners Corporations) [2015] VCAT 956 and also on appeal in the decision of Owners Corporation PS501391P v Balcombe [2016] VSC 384 (Balcombe) ruled in favour of an owner who operated short-term accommodation activities in the Watergate building in Docklands (Melbourne), a building which had a history with short-term rentals. In essence, the Tribunal invalidated a by-law (Rule 34) which purported to prohibit the use of lot and common property “for any trade, profession or business other than letting the lot for residential accommodation to the same party for periods in excess of one month”. It determined that the by-law the body corporate sought to enforce was ultra vires (outside its power). Accordingly, Balcombe has been considered a “green light” to short term accommodation services.

We need a national policy of regulation to allow short term letting in buildings that want it.

In 2017, the “Sandgropers” in the Supreme Court Of Western Australia fought back the other way in the decision of Byrne -v- The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104 (Byrne) which provided some confidence that the implementation of appropriate by-laws can assist with managing short-term letting. In that decision, the owners’ corporation successfully enforced a by-law (By-Law 16) to prohibit a lot from being used for shortterm accommodation. Although the lot owner had successfully obtained approval from Council to use the lot for short-term accommodation, the planning approval noted that it did not “negate the need to obtain other approvals, including approvals from the strata company”. The subject By-Law 16 provided that a lot must be used as a ‘residence’ by the proprietor of the lot, or that ‘occupancy rights’ may only be granted to ‘residential tenants’. The Court determined that the renting out of a residential lot for purposes of short-stay accommodation is not consistent with the meaning of ‘residential’. In dismissing the appeal, the Court concluded that the lots may only be used for a form of occupancy that is consistent with an intention of permanency or place of abode. The use of lots for short-term accommodation where an occupant has no intention to make the lot his or her place of residence is therefore not consistent with By-law 16.

“Queenslander, Queenslander, the Cane Toads” in 2019 (through our office), the Magistrates Courts of Queensland in the decision of Fairway Island GTP v Redman and Murray [2019] QMC 13 considered the Balcombe and Byrne cases (amongst others). In that decision, the by-law relevantly provided: “…each proprietor shall not use or permit his 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 lot from time to time provided that in no event shall any individual rental for be a period ofless than one (1) month.”

In essence, the validity of the by-law was upheld on appeal (albeit within the rarer context of the Building Units and Group Titles Act 1980 (Qld) (BUGTA) as opposed to the more “standard” legislative regime of under the Body Corporate and Community Management Act 1997 (Qld) (BCCMA). Whilst the highest decision on the point under the BCCMA is a QCAT appeal decision (and it is unfavourable to a similar bylaw to restrict a tenancy occupation agreement be for a period of not less than 6 months), the latest decision on the subject provides an additional ground for the strata industry in particular the body corporates to argue for its right to govern, restrict or ban short term letting within its own building.

For the “Cockroaches” in NSW’s the strata industry, owners corporations and participants, it may wish to regain or enhance control over its powers on the short term letting issue.

Whilst the NCAT decision of Estens v Owners Corporation SP 11825 [2017] NSWCATCD 63 has struck down a bylaw that purports to restrict short term letting, that decision (and the position of this State) remains questionable as post-Estens case law and the legislative framework remains unclear. At present a legislative review and draft legislation with enhanced powers of the owners’ corporation has been proposed but not finalised.

So, where do we end up? With a mish mash of ideas and concepts across the States/Territories to what is a National issue to resolve. We need a national policy of regulation to allow short term letting in buildings that want it, costs to be apportioned to those that use it and an overriding power for owners’ corporations and bodies corporate to decide themselves whether they want it or not – simple!

So, bring on the State of Origin, have the Mexicans, Sandgropers and Cane Toads invite the Cockroaches, Crow Eaters, Apple Isle, and The Territory to the game and may the best team win the war on short term letting…

Anyway, I’m off on holidays… Anyone know of a cheap place for a few nights?