Why you need to fine landlords who don’t register tenants

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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