• Creator
    Topic
  • #10818
    fred11
    Flatchatter

      Under ‘Strata Schemes Management Act 1996 (NSW)’, the EC has put forward a by-law motion (which has been passed) which defines a ‘short term lease’ as anything less than 6 months. Moreover, the wording is vague enough to exclude any non-owners who are ‘occupying’ an apartment’ ie. even family members, friends etc., unless a 6 month lease exists. This is explicit intention to combat AirBnb etc. and disadvantage anyone who is a non-resident. All references I have seen to ‘short-term’ rentals in Sydney(Randwick Council) is anything less than 3 months.

      Please comment/advise. Can the above be legitimately done ? Why not 1 month ? Why not 2 years ?

    Viewing 15 replies - 1 through 15 (of 20 total)
    • Author
      Replies
    • #26079
      Lady Penelope
      Strataguru

        If you disagree with a by-law or find that a by-law is unreasonable then you have the option to propose a Motion that amends the by-law and/or clarifies the by-law. If your Motion receives the necessary support at a General Meeting by Special Resolution then the by-law must be changed.

        Below is an extract from the NSW Office of Fair Trading site regarding by-laws:

        Owners corporations can determine the by-laws that suit the preferred lifestyle of the strata scheme. A by-law must not be harsh, unconscionable or oppressive. No by-law is capable of restricting a dealing in a lot, including restricting short-term letting. By-laws cannot restrict children, and cannot restrict the keeping of an assistance animal. (My emphasis added).

        See SSMA 2015 Sections 139(1) and (2) for restrictions on by-laws that may be relevant to your situation.

        If you firmly believe that the OC’s definition of a short term lease is inconsistent with SSMA s139 or any other Section of the SSMA, or Act or law (including local council laws and regulations) then you can use SSMA 2015 Section 136(2) to contest, avoid or negate the effect of the by-law.

        The issue of short term leases is causing immense confusion and has yet to be properly resolved by the relevant authorities. On one side of the argument the NSW Civil and Administrative Tribunal issued an Order that stated an agreement by airbnb does not constitute a residential tenancy lease, and on the other side of the argument the NSW Land and Environment Court issued an Order for the City of Sydney that banned short term tenancies in residential buildings. 

        Getting the definition of “short term accommodation (tourist accommodation)” correct and reasonable will go a long way to resolving all of these issues.

        NB: Some zoning definitions from the Sydney LEP 1996 and from 187 Kent Pty Ltd v Council of the City of Sydney [2007] NSWLEC 88 (2 March 2007) which unfortunately still do not address the definition of long term accommodation and short term accommodation:

        mixed-use development means a building or buildings in which two or more uses are carried out.

        residential accommodation in Central Sydney means a building or part of a building that provides permanent or long-term accommodation, and includes residential flat buildings, dwellings, boarding houses, hostels, student accommodation and the like.

        serviced apartment in Central Sydney is a form of tourist and visitor accommodation and means a building or part of a building that provides self-contained accommodation which is serviced or cleaned by the owner or manager of the apartments or the owners or managers agents.

        #26080
        Jimmy-T
        Keymaster

          All of the above is correct.  It turns out you can’t have a by-law restricting short-term letting.  You can however have by-laws that restrict letting to the terms of the zoning applicable in the Development Approval.

          It’s interesting that despite City of Sydney’s vacillation on this issue, its DAs for apartments in residential only zones say specifically that apartments must not be used or advertised for tenancies less than three months (see below).

          So, in this case, find out what the zoning is for your building.  If it is “residential only” find out what council means by that.  Also check what it says about holiday letting (if anything) in your DA.  

          Finally, tell your strata committee that they can’t have a by-law restricting the length of rentals – or, at least, if they do have one it can be challenged at NCAT and will probably be revoked.  

          However, they can have a by-law telling owners they must abide by the terms of their council zoning, whatever that may be. Doesn’t it amount to the same thing?

          No.  Strata scheme by-laws are superseded by superior laws (like council planning regs) but if you depend on the planning regulations to restrict short-stay lets, you also depend on your local council having the wherewithal and will to enforce them.  

          However, if strata schemes enshrine council zoning restrictions in their by-laws (which is clearly not trying to supersede superior laws) then the strata committee can pursue miscreants themselves without waiting for the council to do something.

          Of course, once our MPs have handed the golden egg to short-stay letting agencies by making holiday lets partially exempt from planning restrictions, all our protections will evaporate. 

          Meanwhile, here is an extract from a Development Approval for a unit block currently under construction in Darlinghurst (my emphasis in bold).

          The following restriction applies to buildings approved for residential use:

          (a) The accommodation portion of the building must be used as permanent residential accommodation only and not for the purpose of a hotel, motel, serviced apartments, private hotel, boarding house, tourist accommodation or the like, other than in accordance with the Sydney Local Environmental Plan 2012.

          (b) A restrictive covenant is to be registered on the title of the development site in the above terms and restricting any change of use of those levels from residential accommodation as defined in Sydney Local Environmental Plan 2012. The covenant is to be registered on title prior to an Occupation Certificate being issued or the use commencing, whichever is earlier, to the satisfaction of the Council. All costs of the preparation and registration of all associated documentation are to be borne by the applicant.

          (c) If a unit contains tenants, it must be subject to a residential tenancy agreement for a term of at least three months.

          (d) No person can advertise or organise the use of residential apartments approved under this consent for short term accommodation or share accommodation.

          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.
          #26082
          fred11
          Flatchatter
          Chat-starter

            Thanks, this is all very helpful.

            It’s pointless saying anything to the EC. I expect they would say ‘That’s what the OC agreed to, so take it up with them….’. I intend to pose the stated question to Fair Trading….what do you think they might say ?

            Surely an apartment owner can have their son/daughter or friends stay in the apartment (without the owner being present overnight) for a week-end/week/2 weeks etc without being bothered by by-laws which may/may not cover ‘short-term letting’ ?

            Does it matter if they pay rent or not ?

            I would have thought a ‘common courtesy’ email to neighbours &/or the EC would be more than reasonable.

            Please advise.

            #26086
            Sir Humphrey
            Strataguru

              However, if strata schemes enshrine council zoning restrictions in their by-laws (which is clearly not trying to supersede superior laws) then the strata committee can pursue miscreants themselves without waiting for the council to do something.

              Most by-laws/rule/articles of OC have a catch-all by-law which states something like the one our OC has: “A unit owner must not use the unit or the common property, or permit them to be used, to contravene a law in force in the ACT.”

              So, as Jimmy suggests, an OC can deal with someone via an infringement notice if they are causing the OC to be non-compliant with zoning regulations or whatever, even if the matter is not explicitly set out in its own by-law. 

              On the matter of allowing a friend or relative stay in your unit for a few days while you are away, if they are not paying they are not leasing the unit. If they are paying, I would guess its a bit of a grey zone if there is no lease agreement. On the other hand, who is to say they are not just helping out with the utility bills or groceries. Frankly, I would not worry if you really are just letting a visitor stay on a few days while you are away. If they really are genuine visitors and it is not a commercial arrangement, I don’t think the OC or EC would get far trying to stop you. 

              #26087
              Lady Penelope
              Strataguru

                I agree that you should take this issue up with NCAT.

                Without personally seeing the by-law, and relying on your interpretation of it, the by-law appears to be unreasonable. It does not appear to comply with either the SSMA or the usual LEPs.

                In the intervening period until this matter is sorted out with NCAT you should enter into a 6 month Lease with your tenant or guest as required by the by-laws but you and the tenant can either:

                (1) agree to include a ZERO break fee clause in the additional terms of your tenancy agreement, and/or

                (2) agree to end the Tenancy Agreement at any time if you and the tenant mutually agree.

                To fulfill the requirements of the by-law all the OC needs to know is that a 6 Month Lease is in place.

                The OC should have no input into the additional terms of the lease that you and your Tenant have personally entered into. You can consecutively enter into as many of these 6 month Leases as you require.

                The Tenancy Agreement Form is here: 

                https://www.fairtrading.nsw.gov.au/pdfs/tenants_and_home_owners/residential_tenancy_agreement.pdf

                #26092
                Millie
                Flatchatter

                  Fred11

                  There has already been an instance where the NCAT has overridden a by-law which tried to outlaw short-term lets on a property at Pyrmont.  Under current legislation, such a by-law won’t hold up in the Tribunal.

                  JimmyT is correct – in NSW it all boils down to the exact wording in your Determination of Development Consent or DA.  

                  NSW Fair Trading has and will recommend introducing a by-law which calls for compliance with the DA on your building i.e., a by-law which calls for adherence to a ‘higher law’.

                  There is NSW Land and Environment Court case law, Foster v Sutherland Shire Council which mentions a residential lease being six months in duration however, under the current NSW Residential Tenancies Act there is officially no ‘minimum duration’ on a Residential Tenancy Agreement.  Note well – as per Proud Sceptic’s advice, a short-term letting agreement, be it Airbnb or one of hundreds of other Internet providers, does not classify as a Residential Tenancy Agreement under Sections 7 and 8(h) of the Residential Tenancy Act.

                  Quoting JimmyT again:  “once our MPs have handed the golden egg to short-stay letting agencies by making holiday lets partially exempt from planning restrictions, all our protections will evaporate.”   

                  Our State MPs, during the course of their Inquiry into short-term letting very much failed to obtain any Legal advice (according to someone who presented themselves at Parliament and asked the question directly), and they also failed to consult the Land and Environment Court (LEC) case law which was provided to them, they ignored all requests to consult with NSW Fire & Rescue, the National Building Codes of Australia and National Disability Discrimination Commissioner, Representatives from Social Housing, they also ignored data supplied from the Financial Controllers of the City of San Francisco, an Australian Criminality Report on ‘mixed use’ in High Rise Buildings, etc, etc.  There’s no doubt that our Pollies want to gift our housing to Airbnb/Stayz/Expedia etc, etc – that was very evident during the course of the Inquiry into short-term letting.

                  For links to NSW case law which makes very, very clear that short-term lets are not considered/classified as “Permanent Residential Occupation”, click here.

                  #26094
                  fred11
                  Flatchatter
                  Chat-starter

                    Millie,

                    The problem, in this specific case, is the by-law (re)defining ‘short-term’ rentals as 6 months. In doing so, there seems to be an intention to label any <6 month lease as a ‘Short-Term Rental’/’Holiday Rental’/’AirBnb Rental’, even if the rental is done via a RE Agent for 3-6 months. They then use these ‘loaded’ terms as a basis for prejudical and antagonistic by-law ‘ammunition’ against any owners (who might use their apartment 1-3 months a year themselves and leased out other times) or landlords who act responsibly.

                    Can someone tell me the problem, preceived or actual, with :-

                    – leases of a minimun of 3 months, thru a RE Agent

                    – leases which meet the local council’s DA/LEPs requirements

                    I would have thought councils & Govt acknowledges the need of these types of availability for : families relocating, renovators needing short leases, families visiting other family members, business etc. These are not the stereotyped AirBnB revellers/groups/partiers etc.

                    #26097
                    Jimmy-T
                    Keymaster

                      @fred11 said:
                      Can someone tell me the problem, preceived or actual, with :-

                      – leases of a minimun of 3 months, thru a RE Agent

                      – leases which meet the local council’s DA/LEPs requirements

                      Are you not reading the responses to your questions above?  By-laws that simply set out to restrict short-stay lets are invalid.  

                      By-laws that restrict lets to periods that differ from the zoning of the building are similarly void.

                      What does this mean to you? You can ignore breach notices if you are sure the by-laws on which they are based are incompetent. All that will happen is that the Owners Corp will take you to the Tribunal and the case should be thrown out.

                      Or, you could show your committee members this correspondence and tell them to get back to you when they have a valid case to pursue.

                      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.
                      #26132
                      Kangarookiwi
                      Flatchatter

                        Hi , this is pretty gritty stuff, but I was thinking – our block is insured under certain conditions that the residents are owners or tenants with a Tenancy Agreement. And the DA was issued as a residential block. And the Fire Compliance was carried out on that basis.

                        If “airbnd” etc etc turns up, can I assume the Insurance Rates go up, the wear and tear on stair wells increases, our fire rating compliance changes – then would seem fair to put those extra costs on the “airbnb” business ?

                        Ill give the insurance crowd a call sometime soon and find out.

                        thanks KK

                        #26133
                        Lady Penelope
                        Strataguru

                          Kangarookiwi – Good idea to check with your strata building insurer and fire regs to ascertain whether short term rentals will cause a financial impact. Both are burdens or costs that are able to be proven (or not) in an objective way.

                          The wear and tear argument is something that will be more difficult to qualify and quantify. Wear and tear depends on many factors that can not often objectively be attributed to short term rentals. Unless it is proven it is therefore subjective and a much weaker argument.

                          #26134
                          Jimmy-T
                          Keymaster

                            If your your building is zoned residential only (in NSW) the simplest way to discourage short-stay rentals is to pass a by-law saying that your strata scheme supports and abides by its council zoning and that any breaches of the residential only zoning, for instance by rentals of less than the period prescribed in the development approval, will be treated as a breach of by-laws and pursued at the NSW Civil Administration Tribunal. Or you could just adopt Model By-law 18 (below).

                            However, if your building isn’t zoned permanent residential the insurance option is possible – if you can find an insurer who plays ball.

                            In the discussions I have had with insurers, most have told me that there would have to be a substantial number of units in a building that converted to short-stay lets – some say as many as 25 to 30 percent – before they adjusted premiums upwards.

                            However, the first insurer who realises the potential for making extra money and helping out apartment blocks that don’t want short-stay rentals could cash in big time.

                            The new laws allow the additional costs of insurance that are brought about by a change of use to be passed on to the owners of the properties concerned (See Section 82, below). If the owner doesn’t agree to the additional charges, the Tribunal can order them to pay.

                            What does all this mean for owners corps that don’t want short-term lets? 

                            If you are in a newer (post-1996) scheme, you could adopt Model By-law 17 in Schedule 3 of the Regulations (also below). 

                            Model by-law 17 requires an occupier of a lot to notify the owners corporation of any change to the use of their lot for short-term or holiday letting. The notice would have to be given in writing at least 21 days before the change occurred or a lease or sub-lease commenced. Remember, these model by-laws do not automatically apply and have to be adopted by special resolution.

                            If you are in a pre-1996 building, you will automatically have by-law 19 (below). You could alter its wording (through special resolution) to make it clear that using lots for short-stay lets is a change of use. 

                            Under either of these by-laws, any owner who changes to short-stay rentals should register a change of use or face a breach notice and potential fine from NCAT. By the way, the fine would be paid to the Owners Corp so it is worth pursuing.

                            Then find an insurer that will charge punitive additional premiums for buildings that have short-stay lets and then pass the additional charges on to the “hosts” who have registered their change of use.

                            Also, once an appropriate “change of use” by-law is in place, you might consider passing a motion at a General Meeting saying something like:

                            This strata scheme does not support or encourage short-stay or holiday letting. We define the change of residential lets to short-stay lets as a change of use as per by-law X.  This owners corporation instructs its officers and managers to identify and pursue non-notification of changes of use as by-law breaches.

                            Furthermore, this owners corporation will pass on any increases in insurance premiums caused by changes of use to short-stay or holiday letting to all owners who let their units in this way, pro rata based on the number of lots used for short-stay lets, as outlined in Section 82 of the Strata Schemes Management Act.

                            This motion is not a by-law so wouldn’t need a special resolution. But just having that in your AGM minutes, reiterated every AGM, may be enough to drive potential holiday let investors away without even having to pick up the phone to your current insurer.

                            Here is the by-law that automatically applies to pre-1996 schemes.

                            19 Change in use of lot to be notified
                            An occupier of a lot must notify the owners corporation if the occupier changes the existing use of the lot in a way that may affect the insurance premiums for the strata scheme (for example, if the change of use results in a hazardous activity being carried out on the lot, or results in the lot being used for commercial or industrial purposes rather than residential purposes).

                            And here are by-laws 17 and 18 in the Model By-laws in the new regulations. NB: These by-laws or variations on them would have to be adopted by special resolution by post-1996 schemes that don’t already have them in place.

                            17 Change in use or occupation of lot to be notified
                            (1) An occupier of a lot must notify the owners corporation if the occupier changes the existing use of the lot.
                            (2) Without limiting clause (1), the following changes of use must be notified:
                            (a) a change that may affect the insurance premiums for the strata scheme (for example, if the change of use results in a hazardous activity being carried out on the lot, or results in the lot being used for commercial or industrial purposes rather than residential purposes),
                            (b) a change to the use of a lot for short-term or holiday letting.
                            (3) The notice must be given in writing at least 21 days before the change occurs or a lease or sublease commences.

                            18 Compliance with planning and other requirements
                            (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.

                            And finally, here is Section 82 of the Act which applies to all strata schemes.

                            82 Individual contributions may be larger if greater insurance costs
                            (1) If the use to which a lot in a strata scheme is put causes an insurance premium for the strata scheme to be greater than it would be if it were not put to that use, so much of a contribution payable by the owner of the lot as is attributable to insurance premiums may, with the consent of the owner, be increased to reflect the extra amount of the premium.
                            (2) The Tribunal may, on application, make an order for payment of contributions of a different amount to one or more contributions levied or proposed by an owners corporation on an owner if the Tribunal is of the opinion that the owner’s consent has been unreasonably refused under this section.
                            (3) An application for an order under this section may be made by the lessor of a leasehold strata scheme, an owners corporation, an owner of a lot or a mortgagee in possession.

                            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.
                            #26136
                            braveheart
                            Flatchatter

                              Happy New Year and thanks for the opportunity to comment.

                              Yes, I agree with proudsceptic and Jimmy that the mechanism exists already to register a special by-law to prevent short-term letting. In our block we have had such a by-law in place for a number of years. It has so far protected the right of the majority to enjoy their homes undisturbed by commercial activities that are not in keeping with our residential zoning. However, recent attempts by the NSW state government to advocate change by force on behalf of the greedy can be met with equal determination within the current laws.

                              There is a simple, democratic solution to this problem that is covered by the existing strata legislation. As noted, owners who want short-term letting in a block can propose a Motion to call a General Meeting where all residents can vote to adopt a by-law that permits short-term letting. However, I would suggest, however, that a yes vote in this instance ought to require 100% agreement. If the vote is yes, the Strata Plan can then be registered as short-term compatible and advertised as such in any future sale or lease. Prospective purchasers and renters will know up-front which buildings permit short-term rentals and which ones do not. The 100% agreement protects owners who bought into a block according to its residential zoning. The requirement for a 100% vote will quickly show just how much demand there really is for holiday lettings in a strata building. Those who want to enforce significant social changes of this nature ought to be required to prove there is agreement for change by unanimous vote. Either the whole block permits it or the block remains free of it. Buildings that do not allow it will attract buyers who don’t want to live with short-term rental disruption. And vice-versa. State government infringements (i.e. not the wet lettuce Fair Trading ‘penalties’) should apply to transgressors.

                              A win-win scenario, no ifs, buts, or maybes, and an end to all the confusion and emotive BS around the issue.

                              #26138
                              Millie
                              Flatchatter

                                As mentioned in an earlier post, an Owner in a block in Pyrmont wanted to short-term-term let, the OC had a by-law in place to stop this, the Owner took the OC to the NCAT and the NCAT sided with the Owner wanting to do short-term letting.

                                I have to hand a letter from Stuart Westgarth, Deputy President – Consumer & Commercial Division of the NCAT, who states, in relation to Strata Scheme Adjudicators of the NCAT:  “Strata Schemes Adjudicators do not have the power to determine mattes involving planning legislation.

                                Be assured that, to date, the NCAT hasn’t touched short-term letting: We’ve had a 1,200-page submission with a request for Orders rejected by the NCAT because it was based on short-term letting…or because the respondents (those short-term letting) included multiple State MPs and well-known Legal practitioners.  Take your pick as to why the NCAT rejected all our documentation on the matter.  And being terribly cynical after all this:  don’t ever expect to be successful if you take a complaint about every type of anti-social behaviour related to short-term letting to the NCAT, as has been suggested in the Report to Parliament as to how such matters should be ‘dealt with’ in future.

                                In NSW it all falls back to what is written on the Determination of Development Consent for your building, issued by the local council.  This has higher authority and overrules any by-law issued by an Owners Corporation.

                                The problem now is that the City of Sydney has made it pretty clear to State Parliament that they want short-term lets determined as ‘complying’ or ‘exempt development’, i.e. they don’t want to be bothered any more with having to enforce legislation.  And all Local Government representatives sitting before the Hearing Committee admitted that they’d done nothing about complaints over short-term letting because they don’t have the funds or manpower to deal with it.  That said, Miami Florida has issued USD4 million in fines between March-October 2016…you’d think that would be enough funding?  Plus the State Government seems willing and eager for Airbnb/Stayz and their cronies to get their hands on every residential property across the State.  This, despite screamingly clear examples of what is happening overseas and here in NSW with regards to Airbnb lets v lets available for tenants.

                                It is reported that in San Francisco Airbnb paid out USD8 million to lobbiests to defeat legislation which was set to curb their activities.  Perhaps no monies have had to change hands in NSW – our State MPs only too willing to open our doors to Airbnb?  Again, with MPs well know love of money…18your guess.

                                If to date you haven’t had short-term lets near you, be very, very, very worried.

                                #26139
                                braveheart
                                Flatchatter

                                  Millie, the information in your post is truly alarming. So no amount of Special Resolutions or Special By-laws can ultimately prevent the usurpation of a persons private property? ‘What’s mine is mine and what’s your is mine also’ – so says the NSW government (and anyone deemed to be its mate). We really have no effective control then of the considerable investment in our own homes if governments can do as you say with impunity. It appears that our considerable financial investment in our homes is at the mercy of any pirate who casts a greedy eye on it.

                                  Of course, I realize that a significant aspect of the strategy of the NSW government’s enforced amalgamation of local council’s is to gain ultimate control of zoning restrictions, thereby eroding the rights of strata schemes to manage their own affairs. Clearly, the law is no help at all since few can afford a protracted lawyers picnic in the Supreme Court. If the votes of Strata owners can ultimately to be overridden in the manner you outline here, what recourse do owners have in the face of such contempt by our elected representatives for the rights of private ownership? Something is very wrong in all of this.

                                  #26140
                                  Lady Penelope
                                  Strataguru

                                    Millie – I agree. This is an extremely complex issue which cannot be resolved by a ‘one size fits all’ solution.

                                    One of the reasons why this issue is tricky is that there is case law which indicates that short term rentals do not necessarily trigger a ‘material change of use’. Therefore Councils cannot ban them in every instance.

                                    Each scenario is different. For example, some apartments have a mixed usage. This includes: use by the owners for some of the time, and the owners family for some of the time, and the owners friends for some of the time, and short term tenants for the remainder of the time.

                                    Other apartments are rented out 100% of the time as short term rentals with 0% usage by owner.

                                    Questions to be asked by Councils when considering this issue are whether the character of the use of the strata dwelling as a residence has been changed so substantially by the short term tenancy as to amount to a material change of use. 

                                    It is a question of fact and degree in every case. The answer will depend upon the particular characteristics of the use as short term accommodation.

                                    The position that: any use of premises as short term accommodation is materially different to a use as a single dwellinghouse because it is not a use of the premises as “the long term home” of persons comprising a household, has not been supported in case law. 

                                  Viewing 15 replies - 1 through 15 (of 20 total)
                                  • You must be logged in to reply to this topic.