The old chestnut that strata schemes can’t ban short-term letting took another hit this month with a decision in a magistrate’s court in Queensland that they most certainly can.
A couple of years ago the Fairway Island gated community, surrounded by waterways in the centre of Hope Island Resort golf course on the Gold Coast adopted a by-law prohibiting lets of less than one month.
You can see why this might be a popular Airbnb and the Queensland Strata Commissioners, in their wisdom (or lack thereof) overturned the by-law when it was challenged by a lot owner. But this month the strata community won its appeal in the local Magistrates Court and the by-law has been reinstated.
And, according to Grace Lawyers (Qld) who ran the case, the most significant issue isn’t that the short-term letting ban was allowed, but that the body corporate’s right to make by-laws to manage their shared amenity has been strongly reinforced.
“The reasons given by the appeal tribunal give a most compelling case for why a body corporate’s power to make by-laws is robust, and rightly so,” says lawyer Jason Carlson in a mail-out about the decision which you can read HERE.
In it he recounts how the much over-used legal provision that “a by-law cannot prohibit or restrict a lease or other dealing with a lot.” Now, in the past year or so this has been knocked over as a reason for not allowing by-laws restricting short-term lets by no less authorities than the highest court in WA and the Law Lords of the Privy Council in the UK.
What makes this case from Southport Magistrates Court special, says the Grace Lawyers report, is that the “fundamental focus for this body corporate was to impose restrictions on the use of lots in order to protect the special residential amenity of its community.”
“Here the lots are undoubtedly established with a view to privacy and amenity,” the Magistrate said. “The true character of the by-law is to ensure that only people who have some longer term commitment to the premises occupy them. That is, they are residents there and subject to some longer term control over their behaviour.”
“This does not mean that every body corporate is in the clear to make a by-law banning short term letting,’ says the report. “What is exciting about this decision is the considered views the Magistrate gave to why Parliament has given bodies corporate the power to make by-laws, and the purpose that by-laws are intended to achieve.”
For instance, the magistrate went on to say that by-laws could be preventative, rather than reactive. Strata schemes didn’t have to wait for the offensive behaviour to occur before banning it.
“In principle there is no reason why a group of people could not set up a highly regulated small community in a way that made it attractive to themselves or likeminded purchasers,’ he added.
“A group of allergy suffers might want to establish a community in which certain plants or animals are prohibited. The ability of a community to govern itself (requiring a 75% majority) would enable the benefits of group titles to extend beyond simply being small lots that share common property.”
How significant the decision will be across the rest of Australia is hard to gauge. The case hardly creates a precedent for superior courts in other states. But it does represent a different frame of mind with regard to strata law.
Owners angsting over “no pet” by-laws will find this perspective interesting, for a start.
And in the current limbo between our short-term letting laws having been announced and being enacted – a period where strata schemes that don’t have by-laws restricting short-term lets but want to get them in place before they are blocked by vested interests – this is quite instructive.
Perhaps wording your by-laws so that the emphasis is on protecting the amenity, community and culture of the building, rather than preventing some indefinable possible disruption, will give them an extra layer of defence when the inevitable challenges land.