Monday, 18 March 2019

What are the recent amendments to the Owners Corporations Act, 2006 relating to short term accommodation arrangements?

1.     Air B’N’B/ Stayz/the short term rental industry in general have attracted considerable media attention in Victoria and Australia over the last several years. 

2.     Attempts to curb the ability of apartment owners/tenants to let their property out by short-stay accommodation arrangements had proved largely unsuccessful in the Victorian Building Appeals Board, Victorian Civil and Administrative Tribunal, the Victorian Supreme Court and the Court of Appeal. For example, see: Owners Corporation PS 501391P v Balcombe [2016] VSC 384, an appeal to Riordan J from VCAT, which concluded that Owners Corporations could not prohibit short term leasing. See also Genco & Anor v Salter & Anor [2013] VSCA 365, an appeal to the Court of Appeal from (originally) the Building Appeals Board, relating to an attempt by the City Of Melbourne to allege that the use of apartments for short stay arrangements was a breach of the Building Code.

3.     However, see Swan v Uecker [2016] VSC 313 in which the landlord was actually successful, arguing the tenant was in breach of the lease by sub-letting to ‘Air B’N’B. 

4.     I wrote a 3 part blog about this issue in August 2016 (see:

5.     In late 2018, the Victorian Labor Government introduced amendments to the Owners Corporations Act, 2006 in an attempt to give Owners Corporations the power to regulate these types of arrangements. Act No 34 of 2018 received Royal Assent on 14 August 2018. The Act came into effect on 1 February 2019.

6.     Among other things, the Act establishes a complaints procedure relating to short-stay accommodation. 

7.     The new provisions purport to allow complaints to the relevant owners corporation about a breach by a short-stay occupant of the conduct proscriptions applying to shortstay accommodation arrangements. 

8. The relevant conduct proscriptions include —
a.    Unreasonably creating noise likely to interfere substantially with the peaceful enjoyment of another lot;
b.    Behaving in a manner likely to interfere unreasonably and substantially with the peaceful enjoyment of another lot;
c.     Using a lot or the common property so as to cause a substantial hazard to the health, safety and security of any person or an occupier;
d.    Unreasonably and substantially obstructing the lawful use and enjoyment of the common property by an occupier or a guest of an occupier; and
e.    Substantially damaging or altering a lot or the common property, intentionally or negligently.

9.     If an owners corporation decides to take action in respect of a complaint, it:
a.    Must give notice in writing, specifying the alleged breach and stating that the breach must be rectified; and
b.    May apply to VCAT to resolve a short-stay accommodation dispute in relation to the breach.

10.     Under the new Section 169, VCAT may make any order it considers fair including one or more of the following orders—
a.    A prohibition order under section 169D (preventing the future use of the premises for short term accommodation arrangements);
b.    A loss of amenity compensation order under section 169E;
c.     An order for a civil penalty not exceeding $1100 under section 169G; and
d.    Any applicable order that VCAT may make under section 165.

11.  The owners corporation must report to the annual general meeting in relation to the number of complaints made; the nature of the complaints; the number of matters on which action was taken under this Division; the nature of the matters in respect of which action was taken; and the outcome of each action.

12.  It will be interesting to see how successful the amendments are. 

13.  I believe there are some relatively large scale short stay operators in Melbourne, whose businesses may be affected (severely) by the legislation, and as a result who may attempt to overturn the legislation as unconstitutional. For example, there does not appear to be any compensation available to those operators whose businesses are severely impacted by the amendments to the legislation.

WG Stark
Hayden Starke Chambers

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