Short-Stay Legislation & You

Posted on 02 February 2018

The wonders of our ever-evolving, app-driven modern culture have brought us countless conveniences. We can find nearly anything from the comfort of our phones – no matter where we are.

Airbnb Overview

Airbnb allows home and property owners to rent out rooms, or their entire residence, to travelers.

Guests are screened, and hosts can request additional verification if desired. Payments are processed through Airbnb’s payment system. The company charges the host around 3% of the payment.

Airbnb boasts full, 24/7 customer support, ‘5-star hosts’, and adherence to global hospitality standards. With over 1.5 million reviews of Australian participant homes and a nationwide rating of 4.8 stars, Airbnb is not only a big presence in our country – we are a top-rated presence on Airbnb.

Rules vs. Laws

Many owners corporations have rules about Airbnb, which often establish restrictions and prohibitions on using the service. When someone buys a property that shares a central physical location with other property owners, the people allowed inside don’t only affect the individual owner, they affect everyone.

Rules are designed to maintain a standard of living for all occupants by protecting their interests – and with property often being the greatest asset, they also protect our investments.

It’s not just lifestyle. It’s a livelihood.

There are many cases to be made against breaking the rules established by an owner’s corporation.

  • Respecting neighbors goes a long way towards building long-term, friendly relationships, and the same can be said for not respecting them.
  • Unruly guests may cause damage to shared property and amenities, not just a single apartment or unit.
  • Infrastructure overuse leads to wear-and-tear, breakdowns, and a lower living standard.
  • Short-stay guests in industrial-scale dwellings attract criminal behavior.
  • Long-term renters care about your property and their relationship to you while short-term letters pose a risk to your investment.

It’s easy to see why the owner’s corporation as a whole would do all they could to prevent short-term renting. To preserve the feeling of home for all who live there, to safeguard their investment, and to maintain principles of decency.

Laws, however, can establish a different standard.

In Victoria, a 2016 ruling on the case of Owners Corporation PS 501391P v Balcombe [2016] VSC 384 determined that the body corporate did not have the authority to prohibit short-term holiday rentals.

This decision overruled the regulations set by the Owners Corporation, which disallowed the use of an apartment for any trade, profession, or business other than letting the apartment as a residential accommodation

The case dealt with a significant amount of business being conducted on-site via Airbnb. The hosts operated a short-term letting business that served over 10,000 guests over 8 years.

This ruling changed the dynamic from a legal concern to one of etiquette, making the issue a conundrum of monetary gain, common sense, and civility.

Legislation Summary

In short, Victorian owners corporations can’t enforce a rule that aims to prohibit Airbnb short-stay accommodation. The power rests solely with local council planning regulations or the Victorian Government.

Current Solutions

New legislation is required to establish a concrete change in favor of owners of corporations. Until then, several social and technological solutions have been offered by many of those affected by the 2016 ruling.

Deal with anyone causing trouble on a case-by-case basis and apply the same approach to temporary guests as you would long-term occupants. This establishes a fair system in-line with legislation.
Amenity induction processes are useful for limiting the attractiveness of short-term renters. For example, a required official process for pool or gym use creates sensible barriers to free-for-all use of facilities.
Restricting access to certain shared spaces such as parking facilities to permanent tenants via security systems.
Ensuring key fobs aren’t copied and establishing a registration process for the issuance of additional fobs.
Gathering evidence and presenting a community case to a serial host in a friendly, neighborly manner could potentially sway them to your perspective.
High tech solutions could roll out in the coming years including near field technology, IoT amenity tracking, and biometrics – though all are subject to potential rulings of their own.

Checking Out

Navigating issues such as short-term letting requires sensibility, patience, and diligence. By implementing a full range of practices and tools to deter short-term letting – while approaching hosts in a neighborly manner – we can better preserve the security, utility, and value of our properties.

Update: February 2018
Docklands News reported a ruling by the Privy Council in London that allows strata corporations to enforce by-laws that restrict short-term renting.

Recognizing the changes to a residence – and the disparity between renting and holiday-making – the council arrived at their decision unanimously.

Owner-occupiers and owners corporations in Melbourne are hopeful the ruling will illuminate the matter as they continue to appeal for the means to safeguard their homes and investments.

Update: April 2018
Docklands News reported new data in March related to the rise of Airbnb listings in Melbourne. In the last two years, listings have seen a 186% percent increase in Melbourne city – with a 132% increase for Melbourne metro.

The increase is likely to continue until short-stay legislation sways in favor of occupiers and owners corporations.

Update: December 2018
The Victorian Parliament recently passed legislation on short-stay accommodation arrangements that will come into effect on the 1st of February, 2019 – or earlier, pending proclamation.

The new legislation will regulate the provision of short-stay accommodations (stays of a maximum 7 days/6 nights), allowing owners corporations to pursue action against short-stay tenants who breach conduct standards. This includes:

  • Unreasonable noise
  • Unreasonable behaviour
  • Health and safety hazards
  • Security compromises
  • Damage to common property
  • Stopping residents from utilising property

Owners corporations will only need to serve a Notice to Rectify Breach to the lot owner (or short-stay provider if they are not the owner). A notice of the allegation may also be served to the short-stay tenants in question.

If the breach is not rectified, the owner’s corporation can apply to VCAT – no need to serve a final notice. VCAT will have the ability to restrict owners from using their lot as short-stay accommodation for a set amount of time, and may also award compensations and fine occupants.

Is short-term renting affecting your life and investment?

Contact Melbourne Strata today on 03 8638 1822 for best-practice OC management and strata management melbourne solutions that will help safeguard your property. Maximise your returns from your investment property get a free rental appraisal in Melbourne from Melcorp Real Estate.

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