Key Takeaways:
- For years short-stay letting created headaches for owners corporations with little they could do about it, but Victorian law has now shifted from managing bad behaviour to giving owners corporations real authority to prohibit short stays.
- Since 1 January 2025, an owners corporation can pass a special resolution to ban the use of lots for short-stay accommodation, register that rule on title, and have it apply across the building.
- The power is not unlimited. A lot used as someone’s principal place of residence cannot be caught by a ban, and a separate 7.5% levy now applies to short stays, which together are reshaping how owners think about short-term letting in Victoria.
Short-stay letting has caused friction in apartment buildings for a long time, from constant turnover and noise to security concerns and wear on common property. For most of the last decade, owners corporations watched this happen with very few real levers to pull. That has changed. Victoria now gives owners corporations the ability to genuinely restrict short stays, not just respond to them after the fact.
This article walks through what changed, what your owners corporation can and cannot do, how to actually put a ban in place, and the practical realities of making it stick.
How the law on short-stay letting changed in Victoria
To understand where things stand now, it helps to see how the law moved in three steps.
The starting point was a 2016 Supreme Court decision, Owners Corporation PS501391P v Balcombe. The Court held that an owners corporation could not make a rule banning short-stay letting, because the role of an owners corporation is to manage common property, not to interfere with what an owner does inside their own lot. For several years that decision set the limit. Owners corporations could not prohibit short stays no matter how disruptive they became.
The next step was the Owners Corporations Amendment (Short-stay Accommodation) Act 2018, which took effect on 1 February 2019. It did not allow a ban. Instead it gave owners corporations and VCAT tools to deal with bad behaviour. Under that regime VCAT can fine a person up to $1,100 for a breach, award compensation of up to $2,000 to each resident whose amenity has been affected, and where a lot owner is issued three breach notices within a two-year period, the owners corporation can apply to VCAT to restrict that lot from being used for short stays for a period. Useful, but reactive.
The decisive change came with the Short Stay Levy Act 2024, which commenced on 1 January 2025. As well as introducing a levy, this Act amended the OC Act 2006 to allow owners corporations to make rules prohibiting the use of lots for short-stay accommodation. For the first time since Balcombe, the power to actually ban short stays sits with the owners corporation.
Can your owners corporation actually ban short stays now?
Yes. An owners corporation can now make a registered rule that prohibits lots in the building from being used for short-stay accommodation.
Short-stay accommodation means a booking for a continuous period of less than 28 days. That is a meaningful expansion of the old definition, which only captured stays of less than seven days. A two-week or three-week let now falls squarely within the definition and can be covered by a ban. Anything booked for 28 days or longer sits outside it and is treated as a longer-term arrangement.
So the question for most Committees is no longer whether they are allowed to act. It is whether they can get the numbers and put the rule in place correctly.
How to pass and register a short-stay ban
Making the rule is a process, and getting each step right is what makes the rule enforceable later.
- Draft the rule. The wording needs to be clear, reasonable and applied equally to all lot owners. A rule that is vague, or that singles out particular owners, risks being struck down at VCAT.
- Pass a special resolution. This generally requires the support of 75% of total lot entitlements or votes. If reaching 75% is not realistic in one pass, there is a fallback. Where at least 50% vote in favour and no more than 25% vote against, the resolution can pass as an interim resolution, which gives the Committee a workable position while broader support is built.
- Register the rule. The rule must be lodged with Land Use Victoria so that it is recorded on title. Registration is what gives the rule its force and puts future buyers on notice.
- Communicate it. Every lot owner should receive a copy of the new rule, and the rule takes effect on registration or on a later date if the rule specifies one.
Done properly, the result is a rule that binds the whole scheme, including owners who are already running short stays, not just new ones.
Getting a rule like this across the line is rarely as tidy as the legislation makes it sound. Pulling together 75% support, drafting wording that will hold up if it is ever tested, and lodging the rule correctly with Land Use Victoria all take a steady hand. That groundwork is exactly the sort of thing a good owners corporation manager quietly takes off the Committee’s plate so the resolution sticks the first time.
What your owners corporation cannot ban
The power to prohibit short stays is real, but it is not a power to ban everything. The key limit is the principal place of residence exemption: a ban cannot apply where the lot is the principal place of residence of the owner, the lessee or the sub-lessee. An owner who lives in their apartment and rents out a spare room, or rents out their own home while they are away on holiday, is protected.
So a blanket “no short stays at all” rule does not reflect the law. The target is the investor-style operation run as a quasi-hotel with constant turnover, not the resident sharing their own home. It is worth being upfront about this when you take the rule to owners, since it heads off a common objection before it is raised.
The 7.5% Short Stay Levy explained
Alongside the prohibition power, the Short Stay Levy Act 2024 introduced a 7.5% levy on short-stay bookings of less than 28 days. The major platforms, including Airbnb, Stayz and Booking.com, collect and remit it at the booking stage, while hosts who take direct bookings are responsible for it themselves. Accommodation that is the owner’s or tenant’s principal place of residence is generally exempt.
The owners corporation has no role in collecting the levy and receives none of it. Revenue goes to the State to fund social and affordable housing across Victoria. For an investor weighing up short stays, it is simply another cost on top of any owners corporation restrictions and council requirements.
Enforcing a short-stay ban in the real world
A registered rule is a strong starting point, but enforcement still relies on process rather than an instant penalty. If a lot owner breaches the prohibition, the owners corporation works through the standard breach-notice and VCAT process, and penalties for breaching a rule are relatively modest. What gives a rule teeth is consistency, good records and a building that notices when short stays are happening.
That is where practical protocols matter, and the measures that worked before the law changed still hold up:
- Brief the building manager or concierge to watch for the signs of short-stay activity, such as luggage turnover, lockboxes and a stream of unfamiliar faces.
- Encourage residents to report suspected short stays to the building manager so the Committee can act early and keep a record.
- Where a lot owner claims an exemption, ask for confirmation that the lot is genuinely a principal place of residence rather than an investment let.
A registered rule backed by a building that pays attention is far more effective than either alone.
Council controls and what a ban means for property values
An owners corporation rule is only one of three layers controlling short stays in Victoria. Councils add their own requirements on top. Mornington Peninsula Shire, for example, requires short-stay rentals to be registered and to follow a local code of conduct, while the City of Melbourne and the City of Port Phillip have been examining day caps. An owner may face owners corporation rules, council planning requirements and the state levy all at once.
This feeds into property values. Apartment complexes in Docklands and Southbank have already banned short-stay letting, and some buyers who assumed they could run an Airbnb found a registered rule in the way. A building known for stable, long-term residents can be more appealing to owner-occupiers, while for investors a ban removes one income strategy but can lift the scheme’s overall amenity. Which way that cuts depends on the community the owners want to build.
Worth watching too: the OC Act is under broader review, with a first tranche of reforms currently before Parliament, so these powers may keep evolving.
If your building is weighing this up
The hardest part of a short-stay ban is rarely the vote. It is keeping owners aligned, getting the wording right and knowing what to do when the rule is tested later. If your Committee is working through any of that, it often helps to talk it over with people who handle it regularly. That is the part we do at Strata Management Consultants, so if a short conversation would help, get in touch and we will think it through with you.
