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Why you need to fine landlords who don't register tenants
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JimmyT
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06/11/2017 - 10:08 pm
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It's funny how the whole holiday letting issue is shaking out a lot of strata and council laws, especially the unenforceable ones. And before we go any further, this is not about Airbnb – it just starts there.

A colleague was looking into a case that began with an apartment owner in the Blue Mountains west of Sydney, who makes about $40,000 a year from renting his flat to tourists when he's not there.

One other resident in the block objected to having a steady stream of strangers coming and going so he reported the host to the local council.

The council threatened the Airbnb host with massive fines because the unit block was in a high fire risk zone.

Not having an up-to-date list of visitors might endanger the guests, they said, as well as firefighters who would not know how many people, if any, needed rescuing in a blaze.

OK, said the happy host, but that would be exactly the same if he had permanent tenants, so what's the difference? Cut to council officers retreating, tails between legs, saying there would be no further action.

So far, so logical … except what's missing from this picture is NSW strata law. Section 258 requires landlords to notify the owners corporation (body corporate) of any changes of leases or subleases.

To be fair, this is one of the most widely ignored parts of NSW strata law. But ironically, it's also one of the few that carries penalties for non-compliance – namely a maximum fine of $550.

And considering fines are payable to owners' corporation funds, you'd think NSW strata committees would be all over this potential revenue earner.

By the way, the law in this form only exists in NSW. There is no requirement to notify the owners' corporation of tenancy changes in Victoria. In Queensland you have to supply the name and address of the tenant and the terms of the lease when it runs for six months or more.

Other states may have different regulations (and probably do, strata laws being what they are).

Back to the NSW laws and those $550 fines: why wouldn't strata committees be keen to both get their strata rolls in order and make some money for minimal effort?

And isn’t this an easy way of curbing holiday lets in residential buildings where they’re not wanted? That was certainly suggested by former Fair Trading Commissioner Rod Stowe.

So what do you do? Quite simply, tell landlords they’ll be taken to Fair Trading for the obligatory mediation, then to the Tribunal (NCAT) for fines for every new resident who isn’t registered.

How do you find out in the first place? Cancel suspect flats’ electronic access keys and see who comes running when they can’t get into the building or up to their floor in the lift.

In the past, this law has been ignored because it was more trouble than it was worth. But now that fines are paid into NSW owners corporations (body corporates) it could be a nice little earner.

This column first appeared in  the Australian Financial Review.

 

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fewin
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10/11/2017 - 2:58 am
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Great idea to invoke this.

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dick brennan
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10/11/2017 - 3:01 am
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Could not find any reference for the quoted requirement anywhere but would really like to know where to look to read about it. Story statement = "In Queensland you have to supply the name and address of the tenant and the terms of the lease when it runs for six months or more".
Can anyone help me find where this is written in any Queensland document?

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JimmyT
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10/11/2017 - 3:07 am
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Right HERE in a factsheet entitled Body corporate rolls and registers it says:

 

The roll of lots and entitlements

The roll is a detailed list of information about each lot in a community titles scheme , as well as the original owner (developer). Information that must be kept on the roll includes ... the name and address of the tenant and the term of the lease (if a lot is leased for 6 months or more)

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Lady Penelope
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10/11/2017 - 10:55 am
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This link below backs up JT's AFR article about leases.

http://www.pageseager.com.au/a.....be-leases/

However, the link raises an interesting conundrum about whether the owner has provided a 'lease'  or a  'license to occupy' the property in the situation where a short term tenant is not given exclusive possession of the whole of the property.

In situations where the owner locks off one of the bedrooms to store their personal possessions, or where the owner locks off the garage space and keeps their car in the garage for the duration of the short term stay, may both have an impact on the determination as to whether the 'tenant' has been given exclusive possession of the whole property.

The two scenarios above are more likely to occur when an owner retains a physical connection to the property, albeit intermittently.

This is clearly different from those owners who have no physical connection to the property apart from operating it as a business.

If exclusive use of the whole property is not provided then it could be argued that the owner has merely provided a "license to occupy" rather than a "lease". A 'license to occupy' would probably not trigger a breach of Section 258. 

Another hurdle to be resolved through the Courts, no doubt!

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Millie
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10/11/2017 - 3:37 pm
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Lady Penelope is correct:  a short-term rental agreement isn't a Residential Tenancy Agreement under the NSW Residential Tenancies Act (see sections 7 and 8(h) specifically), hence it could/would be argued that there is no necessity to advise details for the purposes of listing these occupancies on the Strata Roll.

Short-Term Rentals are, from night one, a commercial use of a residential property - a breach of Planning legislation.  The NSW Land and Environment Court backs this stance, plus finds mixing STRs with Permanent Residents "fundamentally incompatible", plus a whole LOT more.

Sounding like a broken record...(obviously):  this is a Plannng/Zoning issue = it depends on the Determination of Development Application on your building.  If it is zoned Residential, these short-term 'agreements' aren't in keeping with the DA and the conditions of occupancy...back to Local Councils we go and to the State Government to mandate that Local Councils enforce our legislation.

Cheers

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sydprop
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11/11/2017 - 12:08 am
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If the maximum fine is $550 and presumably costs aren't awarded.  I am not sure that the expense of mediation + NCAT would make this worthwhile. Perhaps in bulk?

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JimmyT
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11/11/2017 - 1:20 am
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You are unlikely to get the maximum fine, however, I believe you can apply for costs.

And it has to be better thjan OCs doing all the work and the money going into State coffers

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Contrarian
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13/11/2017 - 5:54 pm
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All well and good but some tenancy arrangements are informal (no lease registered) and it assumes the body corporate has registered all electronic passes (mine hasn't, and when they tried belatedly to do so several years ago found close to 30% non-compliance so gave up)

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JimmyT
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13/11/2017 - 6:37 pm
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Contrarian said
All well and good but some tenancy arrangements are informal (no lease registered) and it assumes the body corporate has registered all electronic passes (mine hasn't, and when they tried belatedly to do so several years ago found close to 30% non-compliance so gave up)  

That's pretty much the point.  Now that you can have the fines paid into the OC's coffers, it's a triple win.  Your tenants are registered, you have money in the bank and your landlords think twice before sneaking your tenants in (and your security keys out).

By the way, the Residential Tenancy Act covers "informal" or undocumented leases, so there is a legal basis for pursuing landlords.  I reckon the Taxperson would take a more than passing interest too.

Of course, this is contingent on Fair Trading and the Attorney General's office getting together and working out how they managed to accidentally remove the ability for NCAT to impose fines. The words "booze-up" and "brewery" spring to mind.

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Stratabox.com.au
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18/11/2017 - 8:40 pm
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How about a convenient, self-service, secure online registration system?

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dingo
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18/11/2017 - 9:31 pm
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How about strata managers do their job instead.

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JimmyT
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19/11/2017 - 4:53 pm
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dingo said
How about strata managers do their job instead.  

How about you check your facts before you make abusive comments? 

The law doesn't say anything about strata managers collecting the names of tenants.  The law puts the onus on landlords to provide the names and OCs to ask for fines when they don't.

BTW, you are teetering on the brink of a ban from this website. Another comment of yours attacking strata managers indiscriminately has already been removed.  If you are not happy with this, I suggest you find a strata forum that is less particular about what it publishes.

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scotlandx
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19/11/2017 - 5:43 pm
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Strata managers aren't psychic.  While I would agree that as with any profession there are bad strata managers, the persons best placed to know who is moving in and out of the building are the residents.

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Stevecro
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20/11/2017 - 1:24 pm
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Lady Penelope and Millie are correct, it is very unlikely that Section 258 of the SSMA 2015 can be used for short term letting as the overwhelming majority of short term letting stays would not be defined as a 'Tenant' under sections 7 & 8 of the Residential Tenancies Act 2010. I am also guessing the intention of the law at the time it was written did not factor 'short term' letting. Further notifying the OC after every short term stay may be seen as 'unreasonable' in some peoples eyes. 

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JimmyT
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20/11/2017 - 2:01 pm
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It seems I have been leading everyone up the garden path (again!).  So if short-term lets can't be defined as tenancies (and I don't dispute any of the above advice) what are they? 

The obvious answer would be a change of use to a commercial let.  But our councils, terrified that they might have to spend money on policing this, refuse to admit it's a change of use, so we are back where we started.

And now we find that NCAT has no power to impose financial penalties, as prescribed in the strata Act, so there isn't much point in creating the kind of by-laws described by the former Fair Trading Commissioner in this thread (item 7.

Your best bet may be to find a strata insurer that will include a clause that massively increases premiums if the building has holiday lets in it.  Those additional premiums can be passed on to the holiday let hosts - it's the law, not a by-law, and it's a charge, not a fine.

All of this is a result of strata being an adjunct of a side-street of a strand of a tangle of unrelated legislation that we call, without a hint of irony, Fair Trading. 

Better regulation?  SOME regulation (and clear thinking) would be a start.

Am I the only person who foresees the NSW government being taken to court  (as occurred with the council amalgamations) to overturn any decision that means our most attractive apartment blocks will be turned into holiday hotels?

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Stevecro
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20/11/2017 - 2:31 pm
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Jimmy, I cannot confirm for sure, but 'short term' lets may just be private agreements and nothing more. I am not sure whether the Australian Consumer Law (ACL) would cover you as most short term lets are just private transactions, in most cases you aren't renting from a business with an ABN etc.

It's the same if you rented any other possession of yours to someone else. E.g. I rent my lawnmower to you for a week for nominal fee of $50. I am guessing if someone is renting their unit out on a regular basis and appears to be running a business (without an ABN) it may be seen as a consumer contact under the ACL due to the volume of transactions etc.

This would be up to the Tribunal to determine. I could be completely wrong, as I am not aware whether short term lets are defined in other laws. I am happy to be corrected though.

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JimmyT
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20/11/2017 - 3:59 pm
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My City of Sydney zoning, including for the building going up across from mine, defines residential lets as 90 days or more and forbids anything less.

The fact that they blithely ignore those limits and want to encourage the rest of the state to follow them in their dereliction of duty is beyond belief and suggests that the Blessed Ms Moore (for whom I have voted in every election) doesn't give a flying fandango about apartment owner-residents and would rather suck up to her trendoid constituency who would rather do what is cool than what is right.

Or maybe I haven't had enough coffee yet ... but here is the tangle of facts we have to deal with.

Fair Trading says strata schemes can't pass by-laws banning STHLs (some lawyers disagree).

NCAT say they can't impose fines for by-law breaches anyway.

FT says only councils can enforce residential-only zoning so you can't even have by-laws that say you must obey the zoning (again, some lawyers say that is not true). 

Councils refuse to do the enforcing (ironic, since it was a fine for illegal letting in Balmain that prompted the whole debate in the first place)

The STHL industry is pouring hundreds of thousands of dollars into their campaigns because they know the buildings where they will get the most resistance - the well-manged and well-maintained ones - are also the ones where they can make the most money.

We know that Airbnb, who present like a social service but act like a highly politicised global corporation, have caused huge problems in other popular tourist destinations around the world.

We know that three university studies ion NSW alone have shown that holiday lets have a detrimental effect on rents and housing availability. Airbnb dispute these reports preferring the survey from their friends at the Tenants Union that said the opposite (BTW: Where did the impoverished tenants get the money for their report, you have to wonder).

Where does that leave us? Caught between politicians (God help us), the majority of whom have no dog in this fight because there's no holiday letting in their constituencies, and the councils who, were this an actual war, would have been shot for desertion.

Either way, unless we come up with some effective way of defending our turf that counters the negative effects of whatever legislation transpires, we are all screwed. 

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Lady Penelope
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20/11/2017 - 5:35 pm
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I totally agree JT.

We are caught not only between the politics - but also between the legislation.

The horrendous inconsistency between the various Acts as to the meaning of "residential property" just adds to the confusion.

Conveyancing law, tax law, GST law, strata law, tenancy law, etc all have a different definition of "residential property". These laws generally make no reference to the term of occupation. 

Unless I am wrong, the only place where you see any reference to the term of occupation appears to be in some local council zoning laws.

For various reasons these are either not enforced or are inconsistently enforced. This begs the questions

(1) "Why have a zoning code if it is not enforced?" and

(2) "Are Councils afraid that they have created a zoning code that can be easily challenged and overturned if it was to be enforced?"

An interesting legal test will arise when a decision needs to be made as to which law must yield to another law.

This needs to be sorted out ASAP. 

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