There has been a growing battle ground in short term lettings in strata schemes. Some lot owners who live in residential apartment blocks have become increasingly concerned that investors are using the block as a quasi-hotel. The investors are not just leasing the property to long term tenants, but they have used platforms like Airbnb to improve their return by offering corporate or holiday suites.
Many strata schemes have tried to oppose the change of use of the building by making by-laws that outlaw short term letting.
In 2017 the Minister for Fair Trading warned strata schemes that they cannot outlaw short term letting as it breaches Section 139 of the Strata Schemes Management Act 2015 (SSMA). Section 139 of the SSMA prohibits an owner’s corporation from interfering with a lot owner’s right to deal on their own property. Solicitors quite properly at the time advised owner’s corporation that the Minister was wrong. If a person does not have the right to allow short term letting, the owner’s corporation can definitely make by-laws outlawing the business.
The Department of Services has now struck back. They have attempted to clarify the situation by inserting Section 137A into the SSMA. Section 137A of the SSMA states:
- A by-law made by a special resolution of an owners corporation may prohibit a lot being used for the purposes of a short-term rental accommodation arrangement if the lot is not the principal place of residence of the person who, pursuant to the arrangement, is giving another person the right to occupy the lot.
- A by-law has no force or effect to the extent to which it purports to prevent a lot being used for the purposes of a short-term rental accommodation arrangement if the lot is the principal place of residence of the person who, pursuant to the arrangement, is giving another person the right to occupy the lot.
- In this section, “short-term rental accommodation arrangement” has the same meaning as in section 54A of the Fair Trading Act 1987 .
In simple terms, an owner’s corporation can outlaw short term letting for investors but cannot stop it for persons who live in the building sometimes and other times rent the property for events or holiday seasons. For example, a person can claim the unit as their principal place of residence and no action can be taken when that person lets the property for 180 days a year.
Even if the owner’s corporation does make a by-law, who is going to enforce the by-law? Moreover, how can they enforce the by-law. the government has put owners corporations in a position where they cannot prevent holiday makers.
Considering short term letting usually brings a better return, investors who pretend to live in the apartment will take advantage of this law. We will just have to get use to the fact we can’t keep out the holiday makers.