This article discussing how NSW Owners Corporations are finally getting laws to restrict short-term letting has been provided by Tom Bacon, Strata Title Lawyers.
There is set to be an early Easter Egg coming for Owners Corporations that struggle with AirBnB and other short-term letting arrangements.
The NSW State Government has finally gazetted the new Section 137A Strata Schemes Management Act to commence on Good Friday (April 10, 2020).
The new Section 137A permits an Owners Corporation to pass by special resolution, a By-Law to prohibit a lot from being used for short-term rental accommodation if the lot is not the principal place of residence for the person that normally resides there.
Under the definitions section, the fine print further explains that the threshold for ‘short-term letting’ is any duration for less than 90 days.
There is conjecture over the term ‘principal place of residence’ and there is sure to be some case law to come out of this, between owners and Owners Corporations. The NSW State Government has seen fit to not include a definition of this term, which is problematic.
To resolve this, we take the view of adopting the definition of ‘principal place of residence’ as used by the Australian Tax Office (ATO) which will provide Owners Corporations with a great measure of comfort as it provides an objective set of criteria for establishing a checklist for ‘principal place of residence.’
So, to give some hypothetical scenarios:
- Example A – Jenny owns an apartment in Crows Nest and resides there full time. She decides to travel to Europe and the UK for 8 weeks in July and August and lets her unit on Airbnb while she is away in order to earn some income and to offset her holiday expenses. Under the new Section 137A Strata Schemes Management Act 2015, Jenny will be able to do this lawfully, and her Owners Corporation will be unable to enforce any By-Law which restricts short-term letting, as this apartment is Jenny’s principal place of residence.
- Example B – Garth owns an investment unit in Bondi Junction through his self-managed Superannuation fund. His tenants have been paying $700 per week, but decide to move out. Garth decides to list the apartment for short-term stays at the rate of $225 per night to see if he can get a higher rental yield and a better return on his superannuation. Garth will be in breach of Section 137A Strata Schemes Management Act 2015 if the Owners Corporation has passed a By-Law to restrict short-term letting. Even if Garth has not yet had any guests stay in the apartment, he will still be in breach even just for advertising the property on a short-term platform.
With the COVID-19 Pandemic in full swing, prudent Owners Corporations will move quickly to adopt and register a compliant Short-Term Letting By-Law to ensure that only long-term residents can access the common property and the apartments in an effort to reduce the risks of community transmission and infection.
Strata Title Lawyers has a comprehensive Short-Term Letting By-Law ready to be purchased for a fixed fee of $300 (+GST). Order your By-Law today (with motion and explanatory note) by emailing [email protected] or by telephone 02 9091 8068.
Have a question about how NSW Owners Corporations are finally getting laws to restrict short-term letting or something to add to the article? Leave a comment below.Embed
- NSW: Q&A Short Term Letting, Airbnb and Coronavirus
- NSW: How will the proposed Airbnb changes affect me?
- NSW COVID-19: Should Owners Corporations & Community Associations Prohibit Use of Their Recreational Facilities?
This post appears in Strata News #337
Disclaimer: The information contained in this article is provided as personal information only. It is not intended to be legal advice and it should not be used as legal or professional advice. The information in this article should be relied upon – lot owners and owners corporations should seek legal advice for their specific circumstances.
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