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  • #10209

    Our Strata Executive Committee has raised the following issue to stop AirBnB guests staying in our building in its recent minutes from the latest Executive Committee Meeting:

    Short term leasing. This matter was discussed at length and it was noted that the Sydney Council is currently carrying out an investigation into short term leasing. The second point was that the current Council restrictions for residential buildings are a minimum 13 week lease term. It was resolved that at the next General Meeting to propose a by-law restricting short term leasing such as Airbnb.”

    Under the STRATA SCHEMES MANAGEMENT ACT 1996 s49(1) there are restrictions on by-laws that can be implemented:

    Specifically, s 49(1) states:
    “(1) By-law cannot prevent dealing relating to lot.
    No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage, or other dealing relating to a lot.”

    The relationship between a host, AirBnB & guests takes the form of a lease. 

    Restricting a lease by implementation of a by-law appears to contrary to STRATA SCHEMES MANAGEMENT ACT 1996 s49(1).
    Therefore, such a by-law cannot be implemented.

    I am correct in this interpretation?

    Please note, we are not aware of any problems that have arisen with AirBnB guests staying in the building (only about 3 apartments host out of approximately 140 apartments in the building, although there are many other forms of short term leasing taking place in the building and have been for the last 15 years).

    Caveat: The building was built around 1980, so does it come under the STRATA SCHEMES MANAGEMENT ACT 1996?

    Thank you kindly for your input with regard to the above question.

Viewing 15 replies - 1 through 15 (of 25 total)
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  • #24110
    Jimmy-T
    Keymaster

      No, section 49 does not apply in these circumstances. My understanding is that the restrictions on by-laws that interfere with people “dealing” with their property are actually quite narrow.  They prevent you from passing by-laws that would stop you selling your apartment or letting it out in ways that were otherwise legal and acceptable.

      However, if a building was zoned or even just deemed to be residential, you could argue that short-term letting was illegal anyway and so you would not be breaching strata law by specifically banning short-term lets. To give an analogy, if you were to pass a by-law banning owners from renting their properties for a business offering sexual services, that would not be a breach of section 49.

      The Land and Environment Court has recently ruled in the Bridgeport scandal that “residential” means lets of no less than three months.  In fact, unless the building was specifically designated, with council zoning, as designed for short-term lets, you  probably should pass a by-law restricting lets to residential.

      Why?  Because even if there are only two or three airbnb lets in the building, if it is zoned permanent residential they are breaking the law.  More importantly, they are the thin end of a rapidly growing wedge.  More than half the apartments in NSW are tenante. As soon as owners, or even renters, discover they can make more in a weekend from holiday lets than they do from a full week’s rent, those small numbers in your building will spread.

      Then you will have all the usual strata issues – such as noisy neighbours and people who don’t ‘get’ they way things are done in your building – multiplied exponentially and without any simple means of redress because the ‘guests’ have moved on before a complaint can be officially raised.

      Airbnb started out as way of people travelling cheaply and enjoying a richer travel experience because they were staying with locals.  Now it is predominantly a money-making exercise in which no one – including the multi-billion dollar agency – takes any responsibility for the behaviour of the tenants but the permanent residents of the buildings have to deal with the consequences.

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
      #24111
      Millie
      Flatchatter

        Dear IsItLegal

        Re:  “The relationship between a host, AirBnB & guests takes the form of a lease….”  No it most definitely doesn’t take the form of a lease – not in NSW at least:

        NSW CIVIL & ADMINISTRATIVE TRIBUNAL (NCAT) – Notice of Order – File No: RT 15/37922

        Applicant: AAA      Respondent:  XXX (Airbnb agreements)  On 22-Jun-2015 the following orders were made:

        The Tribunal notes that as between the respondent and those occupying his premises under short term tourist or visitor accommodation agreements the Residential Tenancies Act 2010 (RTA) does not apply: see, particularly, section 7 and section 8(h) of the RTA

         

        Applicant:  AAA      Respondent:  XXX (lastminute.com, wotif.com, bookings.com, expedia.com etc agreements)  On 22-Jun-2015 the following orders were made:

        The Tribunal notes that as between the respondent and those occupying his premises under short term tourist or visitor accommodation agreements the Residential Tenancies Act 2010 (RTA) does not apply: see, particularly, section 7 and section 8(h) of the RTA

        Tribunal Member

        – – – – 
        Costs about $69 I think for each application – you have to name/pay for each person separately – at the NCAT.  Application is by way of the Residential Tenancies Act, not the Strata Scheme’s Management Act. You fill out a Tenancy Form obtained from the NCAT’s website and tick the box, ‘Other Person’ as the applicant, not Landlord or Lessee.  (They will try to block you applying – but it can and has been done, you must be insistent and tell them there is a precedent.)

        You are looking to declare the ‘Airbnb (or any other short-term) agreements’ at your property NOT Residential tenancies, under section 7 and section 8(h) of the Residential Tenancies Act.  Once you have submitted all your paperwork you then go before a Tribunal Member in a hearing – it isn’t judged by an Adjudicator just on the paper submission.  It is up to the Respondent/s whether or not they turn up for the hearing.

        Keep using the terms:  “The (Airbnb etc) Letting Agreements”…and…“They are not Residential Leases.”

        Then, if your Development Consent says “permanent residential accommodation only”, and you have the Orders from the NCAT in hand, hammer your Local Council for all it is worth to get them to act against the offender.  Council has to then take action in the NSW Land & Environment Court to enforce their/Council’s Development Consent.  No excuses acceptable from Council.  There are case law judgments and precedents which can be referenced by them.

        As per Jimmy T’s earlier writings, the issue of short-term letting in residential properties is currently before a NSW Parliamentary Inquiry – submissions close on 09 November.

        Good luck!

        #24116

        Dear Millie and Jimmy 

        Thank you for your responses.  

        I found the detail provided and issues raised extremely helpful, which prompted my further inquires-

        Millie would you be so kind as to check the reference for:

        NSW CIVIL & ADMINISTRATIVE TRIBUNAL (NCAT) – Notice of Order – File No: RT 15/37922

        I phoned NCAT to get a copy of the decision. Alas, they told me that the reference RT 15/37922 was incorrect. 

        Thank you again for your help.

        #24118
        Millie
        Flatchatter

          Hi IsItLegal

          I have a copy of my Orders from the NCAT in front of me and can assure you it reads:  RT 15/37922 dated 22/06/15.  This Order number was for one Owner with their unit on wotif, lastminute.com, expedia.com (plus literally hundreds of other websites).  It concerns me that the NCAT says that this Order reference is “incorrect”.

          On the same date I requested Orders against another Owner issuing ‘agreements’ through Airbnb. That Order number is RT 15/37925.  Check the NCAT for this and let us know if they are saying this one also doesn’t exist?

          Happy to help you further if I can; you need only ask.

          Millie

          #24299
          JC
          Flatchatter

            Hi Millie,

            Great responses from Jimmy and you.

            We will be putting a motion to an EGM for a by-law to limit the operation of serviced apartments – which is happening in our building without Council consent – and therefore is illegal.  What ‘proof’ should I provide, that this is a legitimate motion, to a Secretary (and Chairperson) who will most definitely argue it isn’t a ‘legal’ motion.  And what follow-up if they succeed in having it taken off the agenda?

            Thanks jc

            #24301
            Jimmy-T
            Keymaster

              It’s not up to you to prove that it is it’s up to them to prove it’s not.

              A simple motion that the owners corporation agrees to abide by local council zoning, specifically in relation to short-term letting as defined by the Residential Tenancies Act and interpreted in recent decisions of the Land and Environment Court, is sound, legal and all-encompassing.

              If they try to knock it out as incompetent, tell them that you will use that entirley bogus decision as the basis for a motion at NCAT to have the entire Owners Corp replaced by the statutory appointment of a strata manager.  That strata manager need not consult the EC (which will be stripped of its powers) and will probably play by the book – meaning any other little lurks and perks will be a thing of the past.

              It’s their call – obey the law or face very serious consequences to their daily lives.

              By the way, the more complicated and legalistic you make the motion, the easier it will be for them to pick holes in it. Keep it simple! 

              The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
              #24305
              Millie
              Flatchatter

                Hi JC

                Further to Jimmy T’s advice, here is what I received from Fair Trading:

                “An owners corporation may also consider adopting (unless it already has) Model By-Law 21 for residential strata schemes “Compliance with planning and other requirements” as provided under the Strata Schemes Management Regulation 2010.  While this model does not restrict short-term leasing, it does proibit the illegal use of a lot and restricts the numbe of occupants to a lot.  An extract of this model by-law is included below:

                (1) The owner or occupier of a lot must ensure that the lot is not used for any purpose that is prohibited by law.

                (2) The owner or occupier of a lot must ensure that the lot is not occupied by more persons than are allowed by law to occupy the lot.

                If your owners corporation seeks to adopt this bylaw, it must be approved by special resolution at a general meeting and registered with the Land and Property Management Authority within two years of its approval.”

                The link to this Model by-law is here:

                https://www.austlii.edu.au/au/legis/nsw/consol_reg/ssmr2010333/sch2.html

                I put this Motion forwarded at our 2013 AGM.  The Motion was defeated.  I’ve put Motions seeking ‘compliance with Legislation’ on all sorts of issues at our past three AGM’s – all have been defeated.  I don’t expect your Owners Corporation would be as blatant, bold and belligerent as ours in chucking all compliance issues out the window.

                Good luck!

                #24325
                Millie
                Flatchatter

                  In the midst of a NSW Parliamentary Inquiry into the adequacy of Legislation surrounding short-term tourist/visitor letting in residential properties and in the week before Christmas, Airbnb has gone on a major advertising blitz in the shadows of Parliament House with billboards in Martin Place, Circular Quay and all around the City pushing their ‘so, so touchy/feely’ rhetoric.  

                  So much for respect for due process.  But then, none is expected from Airbnb and their likes.

                  Airbnb and short-term letting en mass:  coming to your building soon…?

                  #24908
                  Casuarina
                  Flatchatter

                    Hi all,

                    I would like some advice on this topic please. Our 7 year old, 4 unit, NSW ‘Over 55s’ strata scheme is in a scenic area where short term airbnb or holiday lettings may be tempting for future owners but at present we have a >75% (possibly 100%) majority who have asked me to research amending the by-laws to prohibit short term rentals.

                    At present, we have the Strata Schemes Management Regulation 2010 model bylaws so from the Fair Trading advice cited above, it would appear that we are OK as any lease under 3 months would be illegal.

                    But to be doubly certain, I would like to propose adopting a suitable by-law specifically prohibiting any short-term rental agreements or lettings of less than 3 months. Can anyone suggest some suitable wording?

                    We are going to hold a general meeting anyway to change our pet rules from Option B to Option C + fish anyway so it will be a good opportunity to deal with both issues at the same time and I have the full support of 3 out of 4 owners. Owner 4 sadly doesn’t live here due to ill health and his apartment is vacant. But we are sure he will not oppose and may even support this initiative.

                    Thanks in advance.

                    #24915
                    Jimmy-T
                    Keymaster

                      Firstly, your unwell resident can vote by proxy but even if they didn’t, the by-law can only be blocked by 25 percent of votes cast at the general meeting.

                      Here’s the gist of a by-law that might work for you – but you should get your proposed by-laws checked, at least, by a strata lawyer or strata manager.

                      No Short Term Letting

                      1. Owners may not enter into any arrangement to let their lot for a period of less than 3 calendar months pursuant to a lease, sub-lease, tenancy agreement, licence, sub-licence, understanding or contract of any kind.

                      2. Owners must ensure their occupiers or sub-tenants do not let the lot for  a period of less than 3 calendar months pursuant to a lease, sub-lease, tenancy agreement, licence, sub-licence, understanding or contract of any kind. 

                      3. The Owner must indemnify the Owners Corporation against any claim, action, demand or expense incurred in relation to: (a) Short Term Lettings conducted from your Lot in breach of this bylaw; and (b) the exercise of its rights under this by-law; and (c) enforcement of this by-law.

                      4 This by-law confers on the Owners Corporation the power 

                      a) to prohibit owners and others from engaging in Short Term Lettings

                      b) to enter any part of the scheme to carry out investigation to confirm reasonable suspicions that short-term letting is occurring

                      c) to report Short Term Letting to the local council

                      d) to engage in whatever legal action may be necessary or desirable to stop the Short Term Letting

                      e) the authority to recover the costs of carrying out the activities above from the owner as a debt.

                      As I said before, check with a strata lawyer or manager to make sure the specific conditions in your scheme are covered by any by-law.

                      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                      #24916
                      Casuarina
                      Flatchatter

                        Thanks Jimmy. That should do the trick. Much appreciated.

                        Regarding the vote, we have a very harmonious ship and I expect to get either full support or an abstention from our non-resident owner. In any event, his unit entitlement is 24% so the other three owners hold 76% between them.

                        #24917
                        Whale
                        Flatchatter

                          Just one point of clarification Casuarina.

                          The calculation to determine the outcome of voting for a special resolution is on the basis of the numbers of votes cast by those present at the meeting both in person and by proxy, expressed as a percentage of the aggregate units of entitlement (UOE) of only their lots; not the aggregate for the entire Scheme.

                          So if your Scheme’s absent owner declines to nominate a proxy or abstains from voting altogether, then as the other owners would hold 100% of the aggregate UOE for the meeting, a vote in favour by each of them would result in a unanimous resolution; not 76% in favour of the special resolution as you believe.

                          In my experience that subtle difference can mean a lot should the resultant Special By-Law ever be subject to challenge. 

                          #24918
                          Millie
                          Flatchatter

                            Jimmy T’s suggested by-law above is the best I’ve seen – of particular note and persuasion is/are Point 4, c), d) and e).

                            There is the real concern that any/every such by-law could (currently) very well be challenged in the NCAT and deemed inappropriate under section 49 (1) of the NSW Strata Schemes Management Act (SSMA), which says:

                            STRATA SCHEMES MANAGEMENT ACT 1996 – SECT 49

                            Restrictions on by-laws

                            49 Restrictions on by-laws

                            (1) By-law cannot prevent dealing relating to lot No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage, or other dealing relating to a lot.

                            At the recent Parliamentary Hearing in Sydney into legislation covering short-term letting, a recommendation by a senior strata lawyer was put to MPs that section 49(1) be amended so that Owners could take a vote at a General Meeting and, with 75% voting in favour of a by-law on short-term letting, the Owners Corporation would have control over how their Lots are to be used. However, the way this was proposed, it would also mean that 75% of Owners could vote to allow short-term letting, contrary to the Development Consent granted on the building – your strata could be turned into a quasi-hotel overnight if enough Owners wanted this.

                            Since then there has been another proposal put to the Parliamentary Members and senior staff at Fair Trading (by a ‘common person’ – not a strata lawyer) suggesting that Section 49(1) of the SSMA be amended so that Owners Corporations be allowed to pass such a by-law, however it was stressed that any such by-law must be in line with the original Development Consent/Approval granted on the Strata.

                            Time will tell which way the NSW Parliament ‘jumps’ on this issue.

                            I fear profoundly that the building in which I live could, overnight, be advertised globally again as a “cheap/budget 3-star hotel/motel/serviced apartments/backpackers lodge”.  A return to chaos would be guaranteed.

                            A report by the NSW Parliament into legislation covering short-term letting is now due around July, so the word goes.

                            #25136
                            Millie
                            Flatchatter

                              In New South Wales someone has challenged through the NCAT a special by-law restricting the short-term letting of apartments.  The extract from the NCAT’s website can be found below.

                              A Submission was lodged with the NSW Parliament by the former Chair of the Owners Corporation Network to amend Section 49 of the Strata Schemes Management Act (SSMA) so that 75% of owners could introduce a by-law blocking or permitting short-term letting.  Details can be found on the NSW Government’s website link:  

                              https://www.parliament.nsw.gov.au/committees/DBAssets/InquiryEventTranscript/Transcript/9711/Hearing%20-%20Public%20Hearing%20No%202.pdf

                              Should the Government accept this recommendation, the opposing residents could see their residential building converted overnight into a quasi-hotel, should they not have the numbers to block the investor owners wanting to short-term let.  After all, more money can be made from tourists than tenants, and if you’re an investor living elsewhere, who gives a fig about the residents in-house and the destruction of their home lives and the peaceful enjoyment of their Lots?

                              Another submission has been lodged with Parliament – it cannot be seen on the Government’s website as the papers are deemed confidential.   The Submission has also been given to senior advisors within the Department of Fair Trading, requesting that the Act be amended to allow Owners Corporations to introduce a by-law with the stipulation that the by-law be in keeping with the residential status contained in the development consent on said building.  When asked for a reason as to why a by-law would be required, the response given was:  The NCAT will not act to stop short-term letting plus no tenant taking a lease on an apartment ever gets to see the terms and conditions of a Council issued Development Consent on a building.  And, a copy of all by-laws should, under the terms of the SSMA, be given to all tenants within seven days of any lease being issued so no tenant will be left with the argument that they didn’t know they couldn’t short-term sublet.  

                              At Local Government (Council) Level, it seems that Councils across the State have taken the liberty of establishing a moratorium on the issue of short-term letting – many Council representatives have admitted this to State Parliament – and are not taking any action against breaches of Planning/Development Consents.  NSW Land and Environment Court Decisions, or lack there of, confirm as much.  

                              Shoalhaven Council estimates that in many areas between 70-80% of its residential housing is short-term holiday lettings of some sort, and Byron Council hasn’t provided stats on their holiday housing, despite being asked frequently to do so.

                              Depending on whether you love or detest short-term letting, readers will have their preferences for how they want their Parliamentarians and Legislators to respond to the requests for changes to the legislation covering by-laws and the ‘use of Lots’.  

                              I’m not a lawyer – any ‘legal eagles’ might care to volunteer their interpretations on this issue?

                              Here’s the NCAT ‘case study’.  Hoping this helps.  Also hoping it doesn’t depress you beyond words:

                              https://www.ncat.nsw.gov.au/Pages/cc/Divisions/Strata_and_community_schemes/strata_community_schemes_case_studies.aspx#Holiday_lettings

                              Holiday lettings 

                              The order making power which an Adjudicator has under sections 157 and 159 of the Strata Schemes Management Act 1996 provides a means of redress where the original by-laws are changed in a way that may lead to an injustice. 

                              A high-rise apartment building leasehold scheme located in Sydney’s Darling Harbour was managed by a large hotel group for some time, and a number of lot owners had made their apartments available for short-term holiday leases through the hotel group.

                              This situation changed when the hotel group vacated the building and an extraordinary general meeting of the owners voted to adopt a special by-law to prevent short-term leases and serviced apartments. The special by-law prohibited the use of lots for commercial or retail purposes, including the use of lots as serviced apartments or short-term rentals.

                              A lot owner made an application for Adjudicator orders to repeal or invalidate the special by-law under section 157 or 159 of the Act, so that they could continue to lease their apartment to tourists and visitors.

                              The owners corporation’s written submission stated that the use of serviced apartments and short-term leases created security, health and safety issues as well as adversely affecting the general amenity of the building.

                              Section 159 of the Act allows an Adjudicator to set aside a by-law if the owners’ corporation did not have the power to make the bylaw. However, section 49 of the Act also provides that a by-law cannot prevent any dealings relating to a lot.

                              The Adjudicator considered that the new special by-law led to restrictions that were not compatible with section 49, and was therefore outside the by-law making power of the owners corporation pursuant to section 159 of the Act. The Adjudicator also considered section 157 under which a special by-law can be repealed if it is considered that it should not have been made having regard to the interest of all lot owners in the use and enjoyment of their lots.

                              As the owners corporation did not provide any explanation or evidence in support of their statement, the Adjudicator was not convinced that the adoption of the special by-law was necessary for the good management of the property. Orders were made declaring the special by-law invalid.

                              #25161
                              TonyC
                              Flatchatter

                                How best to deal with short-term lettings, Airbnb style, is something that the new Strata Laws in NSW – which start on 30 November 2016 – don’t cover.

                                Instead, the NSW Government is waiting on a Parliamentary Committee set up to inquire upon the – Adequacy of the Regulation of Short-term Holiday Letting in New South Wales – to report at the end of August 2016, before it decides.

                                Modifying the section 49(1) prohibition upon by-laws infringing an owner’s rights to lease is one of the matters raised in the Inquiry for consideration.

                                Planning matters – how should planning instruments deal with short-term lettings, how should Local Councils regulate them, is another. Should there be a database created of short-term lettings premises?

                                Should there be a Code of Conduct administered by the Department of Planning and Environment?

                                I have recently published an article which summarises 

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