Can Body Corporate Ban Airbnb?

Melbourne sits at number 10 on this list of cities with the most AirBnB rentals in the world.  

Apartment buildings in Victoria (and elsewhere) were fundamentally built for owner-occupiers and long-term tenants as homes. The advent of online booking platforms and the arrival of the widely popular AirBnb meant some apartment owners saw an opportunity greatly increase their returns through short-term letting.  

For owners corporations in Victoria, short-term letting and AirBnB created a number of issues. Short-term guests by their nature weren’t concerned with longer term dynamics of being a good neighbour or resident.  

So the big question is can owners corporations in Victoria ban AirBnBs and short-stay in their building altogether?  

Victoria’s Strata Title Act

Owners corporations in Victoria are governed the Owners Corporations Act 2006  

In 2018, the Victoria’s parliament passed the Owners Corporations Amendment (Short-stay Accommodation) Act 2018 in an attempt to mitigate some of the issues and concerns around short-term letting. The Amendment and its provisions came into effect on 1 February 2019 and does not seek to ban short-term letting but rather provide owners corporations with remedies to impose fines and penalties.  

The amendment and reforms were intended to allow owners corporations to take action against owners and their short-term guests. Owners and their guests became liable (either jointly or individually) for fines/penalties, costs to repair property damage, and potentially payment of compensation to affect parties.  

Consumer Affairs Victoria sets out a concise outline for how owners corporations can deal with short-stay letting.  

Reviewing Community Bylaws

Unfortunately for owners corporations in Victoria, OC rules cannot override or conflict with state legislation and this includes OC rules around short-stay. So the question then becomes what OC rules can be adopted in relation to short-stays?  

Is there scope for owners corporations to charge lot owners additional fees due to additional wear and tear from short-stay guests? 

Section 23 (3A & 3B) of the Owners Corporations Act 2006, makes allowances for when there arises an expense that disproportionately benefits one or more owners to a greater extent than others: 

23  Owners corporation may levy annual fees 

(3A) The owners corporation may levy an additional annual fee on a lot owner if— 

(a)  the owners corporation has incurred additional costs arising from the particular use of the lot by the lot owner; and 

(b)  an annual fee set on the basis of the lot liability of the lot owner would not adequately take account of those additional costs. 

(3B) Any additional annual fees under subsection (3A) must be levied on the basis that the lot owner of the lot that benefits more from the use of the lot pays more. 

 Legal Considerations in Victoria 

The legal case that has most influenced Victoria’s current short-stay legislation is perhaps the Watergate OC case from circa 2013. Since that case with all its appeals and all, there have been various consultative processes with stakeholders.  

The matter of OCs banning AirBnBs was ruled on by the Supreme Court of Victoria in the case of Owners Corporation PS 501391P v Balcombe [2016] VSC 384 (22 July 2016). 

This leaves OCs, Committees, and OC managers to rely on the powers and remedies available to them in the Owners Corporations Amendment (Short-stay Accommodation) Act 2018 

Community Engagement and Decision-Making

As with all OC matters, it’s often best for Committees and OC managers to engage with the owners (including utilising short-term letting), short-stay operators, and other stakeholders.  

Balancing individual property rights (i.e. owners seeking additional returns through AirBnB) and the owners corporation collective is a matter for building. Barbara and her team at We Live Here write extensively on short-stay and other OC matters. 

Implications for Property Values and Alternatives

The other significant component of short-stay letting is of course the serviced apartment model. Under this model, instead of listing their individual apartment on AirBnB and dealing with all the work; an owners signs a lease agreement with a dedicated short-term operator (i.e. Quest, Mantra, etc).  

The implication can sometimes less owners wanting to live in buildings where there’s a greater volume of short-stay apartments – which may in turn impact the buyer pool / property value. The other consideration is that buildings with greater than 50% of short-stays may be deemed by the insurance company as a commercial building.  

Communication Strategies

We work with professional OC management companies who are well versed in OC legislation but also know when to take a pragmatic approach to situations. Some pragmatic approaches that we have seen include:  

  • asking owners to put up a laminated card do’s and don’ts (i.e. don’t park in resident or visitor car spaces, don’t try to stuff the pizza box into the rubbish chute etc.) on the back of the apartment entrance door;  
  • regular meetings and dialogue with short-stay operators; and 
  • empowering on-site staff (i.e. building managers, concierge, security) to identify and issue breach notices 

 

Conclusions 

Victoria’s regulations on AirBnB have developed over time and the resultant 2018 amendments – whilst not outright banning AirBnB – does have some benefits for owners corporations. There’s the ever present element of disincentive (for owners and guests to cause issue) in the way of fines up to $1,100 and compensation costs of up to $2,000.  

Lastly, should OC’s have a scenarios where there’s 3 breaches issue within a 24 month period, they seek a VCAT order for a total ban – meaning the short-stay could turn into a long-stay.   

 

The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
Posted
February 07, 2024
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