Hypothetical: Are Airbnb by-laws worth a legal battle?

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Things had gone quiet on the Airbnb front, with both NSW and Victorian policy wonks scribbling away on new legislation to deal with online short-term letting.

But thanks to one of our eagle-eyed Flatchatters, you can now read the submissions made to the NSW Planning Department’s re-think (including thousands of identical ‘Astroturf’, copy and paste submissions from loyal and obedient Airbnb hosts). More on that next week.

It’s widely accepted that holiday lets have a more profound effect on apartment blocks than stand-alone dwellings, for obvious reasons.  However, doing something about it to protect residents (the plan in NSW) or make it easier for Airbnb (the plan in Victoria) is another matter.

Meanwhile, councils in NSW have basically said “not our problem” although clearly it legally is and by now they should be forming an orderly queue outside the Ombudsman’s door for the spanking they so richly deserve.

You can’t blame these poor souls who got themselves elected on a platform of … well … getting themselves elected. It’s very confusing especially when the holiday letting industry (for that’s what it is) is telling us this is about Auntie Mabel renting a room in her flat to a nice Swedish girl so she can pay for her hip replacement, when 60 per cent of the industry (for that’s what it is) is about your neighbour letting out their entire flat AND your gym, AND your security AND your swimming pool AND your peace and quiet, to people they never meet while telling legitimate tenants to go and live somewhere else for four months while the tourists are here.

And we are getting contradictory messages from the people who are supposed to know about this stuff.

Late last year, the highest court in the British Commonwealth, the Privy Council in London, while no longer being the highest appeal court in Australia, ruled on a piece of overseas strata legislation that was basically a cut-and-paste of NSW strata law, section 139(2), which says that by-laws can’t interfere with owners letting their units.

This section, or a local equivalent in other states, has been used in Australia to overturn by-laws banning Airbnb-style rentals of whole homes. However, the Privy Council ruled that these by-laws were valid. Also, the Appeals Court in WA  – the highest court in that State – had previously ruled the same way.

But wait! NSW Fair Trading says they aren’t valid and the NSW Civil Administration Tribunal (NCAT) has revoked a by-law in one case. It’s worth noting that neither the Fair Trading opinion (for that’s all it is) nor the NCAT decision create any kind of precedent, even in NCAT. However, there have also been a number of court rulings in Victoria that have overturned anti-holiday let by-laws in any shape or form.

So we approached five eminent strata lawyers and set them this hypothetical: If a block had residential-only zoning, defined as leases of not less than 90 days, and an anti-short-term letting by-law was challenged, what would your advice be?

Don’t fight it? Or roll the dice and use the WA and Privy Council rulings to support your case?

Leading strata lawyer Stephen Goddard cautions against “rolling the dice.”

“It is not up to an Owners Corporation to gamble with the resources of the people it represents any more than it is appropriate for Government to abdicate its responsibility in the development of relevant public policy in the public interest.”

Amanda Farmer of Lawyers Chambers says the by-law would not fall foul of section 139(2). “It is not the by-law restricting the lease of the lot, it is the local authority … even if the by-law didn’t exist, leases of less than 90 days would be illegal.”

Dr Cathy Sherry, Associate Professor of Law at UNSW, says that it depends on the state legislation and local planning laws, although she points out that in the WA decision, “the judge seemed to have no problem with the idea that a privately-made by-law could override a public planning consent.”

Adrian Mueller of JS Mueller & Co says that rather than a by-law restricting the number of days it could be let, “I would advise the owners corporation to … make a new by-law that would prohibit an owner or occupier of a lot using the lot … for unlawful short term accommodation.”

Jessica Bates, Senior Associate with Sachs Gerace Broome, warns there are no guarantees in legal battles but “I prefer the argument that by-laws prohibiting short term letting are by-laws restricting the use of a lot, rather than restricting the right of the owner to lease the lot, and are permissible and enforceable.”

If you’re interested, it’s well worth reading the lawyers’ responses in full RIGHT HERE. Jessica Bates, the last one on the list, is particularly worth a look because she not only examines the law in considerable detail, but whether or not it’s worth pursuing it.

Oh, and if you want a laugh, click on Melbourne radio host Jon Faine’s evisceration of a hapless Airbnb flack in our Podcast links on the left.  Parasites and predators, indeed!

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