24 Nov 2017A recent landmark legal decision has made it far more difficult for body corporates to stop apartment owners from renting out their property short term on Airbnb.
The NSW Civil and Administrative Tribunal found that a body corporate’s by-laws are secondary to the strata law principle that they cannot “prohibit or restrict” the operation of an owner’s lot. (See Estens v Owners Corporation SP 11825 [2017] NSWCATCD 52.)
Landmark decision could have significant influence on future legislation
This is a very significant decision, as it is the first time that strata by-laws have been overturned in favour of Airbnb in NSW.
I have represented many clients in cases like this, and the law regarding short term rentals has not been clear in the past. The NSW government is currently examining the whole issue of short term Airbnb type letting and this decision by the Tribunal could significantly influence future legislation.
Body corporate passes by-law banning short-term letting
The case involved Peta Estens, a former rower for Australia, who owned an apartment in a five apartment block in Woollahra, in Sydney. For 12 months she let the apartment out short term through Airbnb while she was away on holiday.
But the body corporate passed a special by-law against short-term letting after one owner complained about strangers using the common laundry and strange men who she felt were watching her sitting on Ms Estens’ deck.
Ms Estens argued she was very careful in selecting her Airbnb tenants, they had always left the apartment in immaculate condition and they didn’t hold loud parties. She argued that the body corporate did not have the power to ban Airbnb.
By-laws which are unjust or “harsh, unconscionable or oppressive”
The Tribunal found that under section 150 and section 139 of the Strata Schemes Management Act 2015, the body corporate did not have the power to make the by-law.
Section 139 says that by-laws cannot be unjust or “harsh, unconscionable or oppressive”.
Airbnb tenancy found to constitute a tenancy or lease
The Tribunal found that Airbnb is a lease within the meaning of the Act, and that the Department of Fair Trading and a parliamentary committee examining short term letting held a similar view.
The Tribunal said it was satisfied that “the manner in which the Airbnb tenancy is devolved by the landlord is sufficient to constitute a tenancy or lease”.
If an Airbnb issue blows up in your strata block, it would be wise to get legal advice before making decisions that could end up in court and create animosity among owners and tenants in the building.
The law regarding Airbnb and short-term rentals seems to be constantly changing and it is best to know where you stand with regard to the law.
