Victorian government tweaks pro-Airbnb proposals

The Victorian government has stopped short of recommending that the state’s Owners Corporations be able to limit short-term holiday letting in apartment buildings.

Instead it says the proposals for fines and bans in the original Bill should be given the chance to work, with a review in two years.

Meanwhile the government has renewed its focus on “party flats”, making it easier to pursue owners and tenants whose short-stay guests are disruptive.

“The Government … recognises that there are around 45,000 people living in central Melbourne, including Docklands and Southbank, a large proportion of whom live in apartment buildings,” says the report.

“Unruly parties in short-stay apartments are a real problem and significantly affect residents’ amenity in these areas. The Bill therefore seeks to strike a balance between this important emerging sector of Victoria’s economy [short-stay holiday letting] and the need to respect the rights of apartment building residents to quiet enjoyment of their property.”

However, the broader and some would say more significant issue of the effect on strata residential properties being converted into de facto holiday hotels barely rates a mention in the in the Victorian Government’s response to the nine recommendations of its Environment and Planning Committee’s inquiry.

Last October the Victorian Government passed the Owners Corporations Amendment (Shortstay Accommodation) Bill 2016 – drafted in consultation with online holiday letting giant Airbnb – through the Legislative Assembly.

However, in November the Legislative Council deferred the second reading of the Bill and referred it to the Environment and Planning Committee for a public inquiry.

The Committee was asked to look at the impact of short-stay letting in apartment buildings on individuals, families, apartment owners and owners corporations and the adequacy of owners corporation rules in managing impacts of high intensity short-term lets.

In its report tabled in June this year, the committee made nine recommendations, including that the Government consider giving owners corporations the power to regulate short-stay accommodation in their buildings.

Committee Chair David Davis MLC said then that the original Bill’s proposals were “confusing and ambiguous” and that many valid concerns of apartment dwellers were not dealt with it at all.

In its response, tabled this week, the government shies away from giving owners corporations the right to regulate holiday letting in their complexes. Instead it focusses on the “sexy” issue of party flats, proposing a simpler process for legal action to impose the higher fines for the owners or head tenants of disruptive properties, included in the original Bill.

The biggest potential challenge to holiday letting providers like Airbnb was a proposal that they be obliged to disclose the extent of their activities more fully, something they have been notoriously reluctant to do, citing their hosts’ privacy as being paramount.

However, the report merely recommends that The Department of Economic Development, Jobs, Transport and Resources investigate how such a mechanism could be implemented and report back within two years.

A broad request that the government amends the Bill, where appropriate, to address the issues of affected parties and review consumer property law gained little support.

“Whilst no additional amendments are contemplated at this stage, the Government is committed to ensuring the regulatory framework for short-stay accommodation remains fit-for-purpose,” says the report.

Instead it recommends that the effects of proposed changed be evaluated two years after they have been implemented.

A request that the Office of the Commissioner for Better Regulation reviews the regulatory imbalance between the short-stay and traditional accommodation sectors met a similar “wait and see” response.

A proposal to consider giving owners corporations the power to regulate short-stay accommodation in their buildings is “under review” but the Government response lists potential obstacles to law changes, including:

  • infringing on the property rights of individual lot owners
  • discriminating against lot owners that do not let to problematic guests, as well as well-behaved guests themselves
  • encouraging divisiveness within owners corporations if a prohibition or control were not uniformly supported, and
  • negative impacts on the tourism sector in the event of widespread restrictions.

A call to investigate the costs and benefits of introducing a registration and compliance framework for commercial-residential short-stay accommodation was “supported in full”. However, the Government says it has has no plans to do so immediately.

“Whilst the establishment of such a regulatory framework is not contemplated at this stage, an examination of the potential effectiveness and costs and benefits of introducing such a scheme would be useful to inform future policy development,” says the document.

The response document acknowledges that there have been reports of violence in strata complexes where permanent residents have clashed with short-stay guests, and that some residents no longer feel safe in their own homes because of transient visitors, but said these problems would be largely solved by their “party flat” proposals for fines and bans.

Those proposal would make it easier for owners corporations to initiate legal action against problem landlords by only requiring a simple majority at a general meeting, rather than, as at present, a special resolution which has a much higher threshold of approval.

The government only partly support allowing owners corporations to levy fees on short-stay accommodation providers to cover increased maintenance and repair costs caused by their guests.

It proposes reforming the Owners Corporations Act 2006 to enable owners corporations to separately levy lot owners for a range of matters:

  • the cost of building insurance premiums on the basis of lot entitlement and differential risk
  • insurance excess and increased premiums resulting from culpable actions
  • insurance excesses relating to single-lot claims
  • unrecoverable damage to common property, and
  • maintenance costs arising from particular use of lots.

“This reform will complement the provisions of the Bill, enabling owners corporations to recover costs for damage to property in a range of circumstances, including where it has been caused by short-stay accommodation guests,” says the response.

You can read the Victorian government’s recommendations in full HERE

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