Anti-Airbnb by-laws challenged by Fair Trading ruling

Fair Trading has pulled the rug from under by-laws designed to restrict Airbnb and other short-term letting agencies in residential-only apartment blocks – only your local council can enforce restrictions.

All by-laws restricting Airbnb and other short-stay letting in residential-only apartment blocks are invalid, according to NSW Fair Trading.

Only weeks before the discussion paper on new holiday letting legislation is released, Fair Trading has modified its Strata Living handbook to warn strata committees and owners corporations that they can’t pass by-laws restricting holiday lets.

“Strata laws prevent an owners corporation restricting an owner from letting their lot, including short-term letting,” says a recent amendment to Strata Living. “The only way short-term letting can be restricted is by council planning regulations.”

And that, says a government spokesperson, means by-laws telling owners that they must abide by local council zoning restrictions are invalid as only local councils can enforce their zoning.

By-laws supporting local zoning have been used by some strata schemes as a way around the restrictions on by-laws directly banning short-term letting.

However, a spokesperson for Innovation and Better Regulation Minister Matthew Kean, who has responsibility for Fair Trading, this week confirmed that they are invalid.

“The local council ‘owns’ the zoning regulation,” the spokesperson told Fairfax Media.  “Only they can enforce it.”

“Section 139 (2) of the Strata Schemes Management Act 2015 states that no by-law can prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot,” the Fair Trading spokesperson said.

“Legislative regulations, including council regulations, can only be enforced by and at the discretion of the relevant authority, or delegated authority, tribunal or court, as identified in their governing legislation,” they added.

Airbnb said it welcomed any such moves that protected the rights of people to share their own homes.

“It would be unfair to discriminate against apartment dwellers, and prevent them from participating in the sharing economy in the same way house dwellers can,” Head of Public Policy ANZ at Airbnb Brent Thomas said.

However, this ruling has raised concerns among strata owners, amid reports that  in the Sydney areas where short-term letting is most prevalent, local council reports vary from none in a year to 10 a month, and that’s in adjoining areas.

And with the discussion paper yet to be delivered and the responses then having to be turned into a Bill to be debated and voted on in Parliament, it could be next year before any new laws are enacted.

Until then, says the Ministry, owners can only pursue illegal short-term lets through their local council.

“The government needs to plug this loophole with a temporary regulation or we will see a summer of chaos in Sydney apartment blocks,” says the Owners Corporation Network, the peak body for strata owners. “Local council engagement with this is patchy, to say the least, and it will be at least a year before we see new legislation.”

A spokesperson for City of Sydney Council – where residential letting is defined as three months or more –  denied that they have backed off from pursuing illegal holiday lets but said they had very few complaints, two of which were currently being actively pursued.

“The City of Sydney reviews all complaints about illegal activity to determine what compliance action is needed. Priority is given to breaches that involve health or fire safety concerns,” said the spokesperson.

“The City carefully addresses all reports about short-term letting but has received complaints from only a small number of people.”

By contrast, Waverley Council – which covers Bondi Beach – is averaging about 100 complaints of illegal holiday letting a year.

“Where Council receives complaints that relate to the illegal use of a premises for short term letting (including via Airbnb), council officers undertake an investigation that usually involves an inspection and making contact with the owner of the premises,” a Waverley spokesperson said.

“Where it can be determined that premises are being used illegally for short term lodging, a notice and order may be served on the owner to cease this use,” they added.

The council spokesperson noted that complaints received relating to all forms of illegal short-term accommodation (not only Airbnb) would average approximately 10 per month.

In neighbouring Randwick, however, there has been no council action against illegal short-term or holiday letting over the past summer.

“Council investigates all allegations of unauthorised use of premises, and has received a number of enquiries as to how Council views the use of residential premises for the provision of accommodation advertised on Airbnb and similar online platforms in the past nine months, but has not had cause to take any regulatory action in this regard,” a council spokesperson said.

“We don’t have statistics on the number of notices issued as these are grouped with all notices issued under the category ‘development without consent’.”

A spokesperson for Woollahra Council said they had only had a handful of complaints in the past nine months but two of the properties concerned were now applying for official bed and breakfast permits.

They said the complaints tended to be specific, such as late-night noise or misuse of waste bins, rather than alleged breaches of residential zoning.

North Sydney council defines short-term letting as a commercial enterprise and therefore it’s not permitted in residential-only blocks.  A spokesperson said they have dealt with “only” 20 complaints in the past year.

“In response to customer requests relating to short-term letting, Mosman Council resolved to only investigate matters where there is a risk to safety,” says a council spokesperson. “Council has also written to the State Government, with a request to consider changes to the legislation.”

The governments’ discussion paper on holiday letting legislation is expected to be issued within the next week or so.  Meanwhile owners corporations have been advised to get legal advice on their by-laws.

“Owners corporations and/or lot owners should seek independent legal advice about the validity and applicability of current or proposed by-laws,” said the government spokesperson.

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