Short-Term Letting – The Holding Pattern Continues

On Tuesday we all waited with bated breath for the State Government’s 1pm announcement on their short-term letting Policy document . At 12.45pm the announcement was cancelled. The back bench refused to support the proposal and the matter was back to the party room.

So what does this mean to your owners corporation?

Basically, not much as we continue to wait and see.

Reform now is unlikely prior to next year’s State election. This isn’t necessarily a bad thing. The Government was seeking to impose a blanket limitation on owners which only allowed short-term letting for a maximum of 180 days in any one year. Regional areas were excluded from the cap and individual Owners Corporation’s had no authority to ban short-term letting in their buildings. The proposal did not seem to address concerns put forward by key stake holders.

In response to last year’s Options Paper, where the NSW Government sought feedback on reform in relation to short-term letting, the Owners Corporation Network put forward a submission entitled ‘Our Strata Community, Our Choice’. In short, the submission proposed that each Owners Corporation should be able to make its own decision in relation to short-term letting, its suitability and the management protocols around it.

This position was supported by the City of Sydney after it conducted a survey of its residents on the matter. 37% of respondents indicated that short-term letting was a significant or moderate issue in their building.

It seems, reading between the lines, that the backbenchers are nervous that the proposed 180-day limit does not address the issue in a manner likely to be populist among constituents in key seats.

So now we wait. Given the delay in Government reform, it seems more than likely that we’ll see this issue argued out in the Courts and legislated through precedents.

The  Estens case (Estens v Owners Corporation SP11825 [2017] NSWCATCD 63) in NSW, in which NCAT held that the Owners Corporation’s by-law prohibiting short-term letting was invalid, is considered by many lawyers to be an unsatisfactory outcome. Neither party was legally represented, so the matter was not heard on the merits of law. Further, the decision published by NCAT was brief to say the least, and relied almost entirely on the Office of Fair Trading’s publication, ‘Strata Living’. The potential flaw in this decision is that the Office of Fair Trading is charged with enforcing the law, not making it.

The Estens case is also at odds with a WA Court of Appeal (Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104) decision, which upheld a short-term letting by-law. This decision was later further supported by the Privy Council (England’s highest Court, and once ours) in relation to a strata scheme in the Caribbean. This may seem irrelevant in NSW, however is important as the Caribbean’s laws are modelled on NSW legislation.

As this issue remains in a state of flux we will keep you up to date with developments as they occur.

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