Can Owners Corporations Ban Airbnb in Melbourne?

[September 2024 update]

Victorian councils and owners corporations are set to gain new powers to regulate or even ban short-stay accommodation, as the Allan government introduces legislation to implement a 7.5% levy on such bookings.

The levy, expected to generate an estimated $60 million annually, will be applied to bookings made through platforms like Airbnb and Stayz starting from January 1st next year. The funds raised will be directed towards Homes Victoria to support the construction and upkeep of social and affordable housing, with a dedicated 25% allocation for regional Victoria.

The legislation also outlines exemptions to the levy. Homeowners renting out their primary residence for short stays, commercial accommodation providers like hotels and motels, and stays exceeding 28 days will not be subject to the levy.

Additionally, the bill empowers owners corporations to ban short-stay accommodation within their developments if 75% of owners agree. Councils will also be granted authority to regulate short stays through planning system changes, including restrictions on listing durations and property numbers, and even outright bans.

[02 July 2024 article]

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 designed for owner-occupiers and long-term tenants. The advent of online booking platforms and the rise of Airbnb meant some apartment owners saw an opportunity to significantly 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 the 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 by the Owners Corporations Act 2006.   

In 2018, Victoria’s parliament passed the Owners Corporations Amendment (Short-stay Accommodation) Act 2018 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 do 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 potential payment of compensation to affected parties.  

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

Why Airbnb is a growing issue for Melbourne buildings

Melbourne ranks among the top global cities for Airbnb listings, and short-stay accommodation continues to grow across apartment buildings.

However, most apartment developments in Victoria were designed for owner-occupiers and long-term residents, not transient accommodation.

For many Committees, this creates real challenges:

• Increased noise and disruption
• Misuse of common property
• Security concerns with unknown occupants
• Higher wear and tear on shared facilities

Short-stay guests are often not invested in the long-term wellbeing of the building, which can place strain on both residents and building management.

So, can owners corporations ban Airbnb?

Short answer: No, not under current legislation.

The Owners Corporations Act 2006 does not allow owners corporations to create rules that prohibit short-stay accommodation outright.

This position was reinforced in the Supreme Court of Victoria case:

Owners Corporation PS 501391P v Balcombe [2016] VSC 384

The ruling confirmed that owners corporations cannot restrict a lot owner’s lawful use of their property through rules alone.

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 

What the law allows owners corporations to do

While a ban is not currently permitted, the 2018 amendments provide meaningful enforcement tools.

1. Issue breach notices and penalties

Owners corporations can take action where short-stay occupants:

• cause damage to common property
• create nuisance or hazards
• breach rules of the building

Penalties may include:

• Fines (up to prescribed limits)
• Compensation for affected residents
• Recovery of repair costs

2. Escalate repeat offences to VCAT

If a lot receives three breach notices within 24 months, the owners corporation may apply to VCAT.

VCAT can then:

• issue orders against the lot owner
• prohibit that specific lot from being used for short-stay accommodation

Important clarification:
This is not an automatic building-wide ban. It is a VCAT decision applied on a case-by-case basis.

3. Levy additional fees for short-stay use

Under Section 23 (3A and 3B) of the Owners Corporations Act 2006:

An owners corporation may charge additional fees where:

A lot creates higher costs due to its use, and
Standard fees do not adequately cover those costs

This can apply to:

• increased cleaning
• lift maintenance
• waste management
• security and management overhead

This creates a practical way for Committees to address financial impacts of short-stay use.

Practical insight for Committees

In several buildings we have worked with, a combination of consistent enforcement, clear communication, and cost recovery strategies has significantly reduced short-stay-related issues.

Rather than focusing on banning Airbnb outright, high-performing Committees focus on control, compliance, and accountability.

If your building is experiencing repeated issues, it may be time to step back and assess whether your current approach is delivering the outcomes residents expect.

A structured review of your rules, processes, and management setup can often uncover practical changes that significantly improve day-to-day living conditions within the building.

Strata Management Consultants have supported many Committees in Melbourne through this exact scenario, helping them move from reactive issue management to a more structured and effective approach, including when transitioning to a new management provider.

Reviewing rules and by-laws

Owners corporation rules must not conflict with legislation.

This means rules cannot ban short-stays, but they can regulate behaviour.

Effective rules often focus on:

• noise restrictions
• use of common property
• waste disposal
• security and access control

The key is to ensure rules are:

• clear
• enforceable
• consistently applied

Airbnb challenges in your building? Here’s a smarter way forward

Short-stay accommodation is not going away, and under current Victorian legislation, owners corporations cannot simply ban Airbnb outright.

However, Committees are not without control.

The real issue for many buildings is not the legislation itself, but how effectively rules are implemented and enforced on a day-to-day basis.

Where short-stay issues persist, it is often a sign that the current approach or management structure is not delivering the level of control the building needs.

Strata Management Consultants have worked with Committees across Melbourne facing these exact challenges, helping them review their current setup, strengthen enforcement strategies, and where needed, transition to a more effective management arrangement.

If your building is experiencing ongoing disruption, a structured review of your rules, processes, and management approach can often lead to immediate and practical improvements.