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Battle looms on Airbnb after landmark Sydney ruling

October 13, 2017 Headline News No Comments Email Email

Following a recent landmark legal decision by a New South Wales tribunal, a battle is looming with major implications for Airbnb. At stake is whether residents of strata-title apartment blocks have the right to rent out their units to visitors and tourists.

So far, a legal decision says residents do have that right. But both sides have strong opinions on the issue, which is far from closed.

A couple of months ago, Sydney teacher Peta Estens took the management of her apartment building to a NSW tribunal over whether she was legally permitted to rent out her unit on Airbnb during her school holidays. She won, even though she had been told earlier by the building’s ruling body that the strata-title block’s bylaws didn’t allow her to rent out her unit.

As the Sydney Morning Herald’s Domain section noted, the landmark decision by the NSW Civil and Administrative Tribunal (NCAT) was the first time strata bylaws had been overturned in favour of Airbnb in NSW. Domain observed that the decision would “have major repercussions for every apartment building that has tried to restrict short-term lets”.

Estens went to NCAT to find whether a special by-law prohibiting illegal uses including short term lettings was valid. NCAT found that it wasn’t.

NCAT’s decision, by general member J A Ringrose, was as follows: “Pursuant to provisions of s. 150 of the Strata Schemes Management Act 2015 the Tribunal declares that special by-law 1 – Prohibiting Illegal Uses (including short term lettings) which was passed at an extraordinary general meeting of the Owners Corporation on 16 February 2017 is invalid in that the Owners Corporation did not have power to make the by-law.”

A notation from NSW Fair Trading published November 2016 indicates that “no by-law is capable of restricting a dealing in a lot including restricting short term letting”.

Estens told NCAT that she had rented her home through Airbnb while she was travelling interstate or overseas and that over a 12-month period she had received only two complaints, regarding misuse of the washing machine in the commercial laundry.

She indicated that as a result of these complaints she changed her rules to prohibit pets and limited use of the washing machines. She claims that she always found her apartment in impeccable condition after she returned from letting it, as she was very selective with the guests she permitted to short-term-lease her property.

The Owners Corporation of the building  was concerned about security and noise if short-term occupiers were in possession of units.

Anyone wishing to read the NCAT decision can do so here.

Estens told Domain that she made AUD 13,000 last year on Airbnb by renting out her unit when she was away.

A counter-campaign has been mounted to defend the rights of building owners and other residents who don’t want Airbnb-style lets in their building. A legal appeal is possible though no final decision has been taken.

Airbnb is obviously pleased with the NCAT decision. Meanwhile, in a parallel move, a NSW Parliamentary Committee has recommended apartment owners should not have the right to choose whether or not short-term rentals like AirBnB are permitted in their buildings.

Hoteliers and accommodation bodies in Australia have often voiced objections to people letting apartments frequently on Airbnb or other, similar “sharing economy” schemes. Hotels see “sharing economy” platforms like Airbnb as allowing people to effectively set themselves up as unofficial hotels, without needing to comply with all the expensive legal and safety requirements, such as fire safety, that apply to real hotels. This is not to suggest that Estens did anything like that.

A campaign has been set up under the title Our Strata Community, Our Choice to fight for the right of building occupiers to decide their own stance on whether individual unit owners should be allowed to indulge in short-term lets.

In NSW, new strata laws started in November 2016, “modernised to fit the reality of living in a strata townhouse or apartment today,” in the words of NSW Fair Trading.

The ‘Our Strata Community, Our Choice’ site notes: “The NSW Government changes to the Strata Schemes Management Act came into effect in November 2016, and prevent apartment owners from having a say on whether to allow holiday rentals.

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“Our Strata Community, Our Choice is a campaign to demand that owners have the right to decide whether they will accept short-term rentals into our communities.

“As the situation currently stands, if communal facilities of an apartment building are damaged by short-term letting, it is apartment owners, who had no say in allowing tourists in, who foot the bill.

“These are our garages, carports, lifts, lobbies, grassed areas, pools and gyms that we pay for, and we should have a say on whether they are opened up to tourists and bucks’ parties.

“New York and London have both introduced severe restrictions on short-term letting, and NSW and Sydney need to follow their lead.

“But unlike those cities, we are not asking for a ban.  We are demanding a vote and a voice.

“If the majority of owners in a building support or oppose short-term letting in an apartment block, that should be the factor that decides whether short-term letting is allowed.

“Our homes are not hotels, and we need a say on short-term stays. It’s not the sharing economy if you don’t ask, it’s simply theft.”

Written by Peter Needham

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