By-laws Mandating Length of Tenancies are Invalid


In brief: With the increasing popularity of Airbnb accommodation services and recently proposed legislative changes in Victoria, there are a number of recent cases and issues to consider that have arisen with short-term letting and owners corporations.

Court found by-law which mandated the length of residential tenancies was invalid

In Macleay Tower & Villas [2017] QBCCMCmr 12, the body corporate passed a resolution to include a new by-law which provided that any residential tenancy in the scheme shall be permitted only for a minimum term of three months.
The issue before the adjudicator was whether this by-law was valid and enforceable. The issue considered was whether short-term tenants are occupiers under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act), and whether they use the property for ‘residential purposes’.
Section 180(3) of the BCCM Act states that if a lot may lawfully be used for residential purposes, by-laws cannot restrict the type of residential use. Additionally, section 180(1) of the BCCM Act states that if a by-law is inconsistent with the BCCM Act, it is invalid.
The adjudicator found that short-term tenants were occupiers under the BCCM Act, based on past decisions of adjudicators and QCAT Short-term tenants were also found to put the property to residential use, based on the definition of ‘residential property’ in Schedule 6 of the BCCM Act.
As a result of these findings, it was ordered that the part of the by-law which mandated the length of residential tenancies was invalid and should be removed from the by-law.
There have also been several Victorian cases concerning these issues, the most significant being Salter v Owners Corporation PS501391and Owners Corporation v Balcombe [2016] VSC 384.

The Court found that owners corporation could not prevent short-term occupants from accessing common recreation areas

In Salter v Owners Corporation PS501391P, it was found that an owners corporation [equivalent to the body corporate in Queensland] of an apartment complex could not prevent short-term occupants having access to common recreation areas, as the proposed reason for preventing access was not for the purpose of security or to protect common property.
Short-term occupants were subsequently allowed to access all the common areas of the apartment complex except the gymnasium area. This was because there was a valid by-law created by the Owners Corporation which mandated that any person who wanted to access the gymnasium area had to undergo an induction by a personal trainer.

Owners do not have the power to prohibit short-term letting

In Owners Corporation v Balcombe [2016] VSC 384, it was found that an owners corporations did not have the power to prohibit short-term letting.
In the Supreme Court of Victoria, Justice Riordan found that a rule created by the owners corporation of an apartment complex to prohibit short-term letting was inconsistent with the powers that Parliament intended owners corporations to have, as per the Owners Corporation Act 2006 (Vic).

Additionally, Justice Riordan found that the Subdivision (Body Corporate) Regulations 2001 (Vic) did not confer the power to regulate this sort of conduct on the Owners Corporation.

Legislative changes impacting short-term or short-stay letting including Airbnb

The most significant changes in this area are happening in Victoria, due to decisions being handed down in the above high-profile cases and the introduction of theOwners Corporation Amendment (Short-stay Accommodation) Bill 2016 (Bill).
The Bill defines a “short-stay accommodation arrangement” as a “lease or a licence for a maximum period of 7 days and 6 nights to occupy a lot or a part of a lot affected by an owners corporation.”
The Bill provides that owners or occupiers of a lot can make a complaint to the owners corporation about the conduct of a short-stay occupant (s 159A(1)). If the owners corporation decides to take action against the occupant, they must give notice of the conduct to the lot owner and/or the short-stay provider. The notice must specify the alleged conduct, the person to whom it is given and that they are required to rectify the conduct.
With the Bill giving new powers to the Victorian Civil and Administrative Tribunal (VCAT), the owners corporation can now also apply to VCAT to try and resolve the dispute in relation to the conduct of the short-stay occupant. The following orders can be granted:
  • Prohibition order, which prohibits the use of a lot or part of the lot
  • Civil penalty order (maximum penalty $1,100)
  • Loss of amenity compensation order in favour of an occupier of another lot which can be made for conduct which interferes with the other occupier’s ability to peacefully enjoy their lot and common property, such as:
  • creating loud noises
  • behaving unreasonably
  • unreasonably obstructing other occupiers from enjoying common property
  • using a lot or common property in a way that causes a hazard to the health and safety of another occupier
The maximum compensation that can be awarded is $2,000 to each affected occupier for each breach.
The owners corporation must report any complaints about short-stay occupant conduct to the annual general meeting.
The Bill has been passed by the Legislative Assembly, but has not yet been passed by the Legislative Council. The Legislative Council referred the Bill to the Environment and Planning Committee, who published an inquiry into the Bill in June 2017. The inquiry stated that the Bill did not address many key issues adequately, so further amendment of the Bill is likely.
Recently there has been an inquiry into the adequacy of short-term letting regulations in New South Wales. In response to the inquiry, the New South Wales Government has agreed to consider amendments to strata regulations to give owners corporations more powers to manage and respond to adverse behaviour resulting from short-term letting. The New South Wales Government has also decided to review the impact of short-term letting in the strata environment in five years’ time.
It still remains to be seen whether something similar to the Victorian Bill will be proposed to the Queensland Parliament.
This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​
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