Airbnb, landlords, and body corporates

Technology and the internet have changed many things and, at times, rules and regulations need to change. The metaphoric rise of the short term accommodation websites are no exception.

As discussed recently in our quarterly newsletter, a landlord challenged the right of a tenant to sublet her property for the purposes of short term accommodation. When the issue went to the Supreme Court it was ruled that the tenants did not have the right to use the property exclusively for this purpose as it constituted subletting. Tenants may, however, sublet a room of the premises they lease.

In another recent Supreme Court ruling, the authority of owner’s corporations (body corporates) to prohibit short term rentals was curtailed.  At the Watergate Gardens Docklands apartment complex in Melbourne, some residents were concerned that short term guests were noisy and caused damage to common property like lifts and corridors that are not designed to cope with large numbers of visitors.

The residents of the complex felt that their property had a feeling of being over-run by short term guests who were intent on partying and having a good time for the period of their stay. They also expressed concerns that, as a result of the added wear and tear, the short term operators were not paying their fair share of repairs and maintenance.

Whether or not the owner’s corporation can place restrictions on this type of operation was taken to the Building Appeals Board, Supreme Court, Court of Appeal and VCAT before heading back to the Supreme Court.

This battle, considered a test case, was between Watergate’s owners’ corporation and short stay operator Paul Salter, who along with his partner Belinda Balcombe runs Docklands Executive Apartments which leases at least 11 units in the building to short-stay tenants.

In his ruling, Justice Peter Riordan stated “In my opinion, the prohibition of businesses generally and specifically businesses related to short-term letting exceeded the scope of what was intended by the Parliament in enacting the Owners Corporation Act 2006”.

The decision will affect owner’s corporations throughout Victoria. It is also likely that this decision will be considered when the issue is raised in other states.

This finding means that short term accommodation sites can freely operate in Melbourne’s apartment buildings either as owner/operators or with a landlord’s approval.