Serviced apartment issue magnifies

By Shane Scanlan

The magnitude of the issues surrounding the use of residential apartments for short-term stays took a quantum leap last month with serviced apartment operators calling for their industry to be regulated.

Sparked into rapid action by the City of Melbourne’s test case attempt to cease the practice in Docklands, a number of worried operators have formed the Victorian Holiday and Short Stay Industry Group (VicShortStay).

They say that the eyes of the industry in the rest of Australia are firmly focussed on Docklands and what happens here will have potentially enough significance to affect the national economy.

The City of Melbourne’s building department is attempting to stop owners in the Watergate tower from renting their apartments for less than 30 days at a time.  The issue has been ongoing since April when the council first served “show cause” notices on owners.

In October the council issued building orders against 26 owners and reports that all of the owners have since appealed the orders to the Building Appeal Board.

The council is using the building code as the basis of its actions and, if successful, it could mean to end to the practice in Australia.

Serviced apartment operators say they have beaten similar attempts to stop them under planning law, but this is the first time they have been threatened by the building regulations.

They say they are confident of their legal position and that they always intended to form an association and development a code of practice for the industry. But the action against Watergate owners has brought forward the formation of an industry group.

The founding members of VicShortStay are in an interesting position in that, while they want to advocate for their position, they mostly wish to remain anonymous because they fear reprisals from municipal councils.

They claim that the hotel industry is behind the moves to shut them down because they offer a more attractive and mostly less expensive product to visitors.

But they also acknowledge and don’t condone the attitude of some rogue operators who do little to stop apartments in residential buildings being used for parties by groups of revellers.

The issue was in the national media spotlight on the Gold Coast late last month when mobs of “schoolies” managed to rent residential apartments and caused mayhem.

And it is widely acknowledged that the actions of a rogue operator in Watergate led the City of Melbourne to take the action it is currently pursuing.

But the operators insist that the actions of an irresponsible few should not result in the entire industry being shut down.

“VicShortStay believes that rather than shutting down the industry, which would greatly impact on tourism and the number of beds provided, the industry should promote responsible self-regulation. Responsible self-regulation will ensure that short stay accommodation is provided in accordance with acceptable community standards,” a spokesperson said.

“VicShortStay believes that when property managers do not manage guests properly, for example, by allowing their guests to hold parties in their apartments, guests’ lack of respect for building common areas and excessive noise that local councils have nowhere to refer complaints and in frustration, are turning to legal channels to try and shut down the entire industry.”

VicShortStay says it is advocating a code of practice (currently before the Australian Competition and Consumer Commission) for adoption through a self-regulating regime.  But it says it is ultimately looking for strict government regulation and licensing.

It says it wants to become the Victorian chapter of a national industry group governed by national standards.

“In all this debate, people have lost sight of the cause of the problem,” one operator told Docklands News. “The cause of the problem is the behaviour of some guests but nothing is being done about addressing this.”

“And there is no public policy debate going on to look at the wider implications of what is going on and the repercussions that would flow from shutting us down.”

“And remember that no one has done anything illegal.  We are all operating within the law,” he said.

The operators warn that the economic fall out could destabilise the national economy.

But the opponents of serviced apartments have also been busy organising themselves, with Docklands resident and Arkley Owners Corporation chair Roger Gardner heading up a group he calls an “intra-city committee on serviced apartments”.

The group was initiated by the Southbank Residents Group but Mr Gardner says he expects people to join from all areas across the City of Melbourne.  He was at pains to point out that he was not representing the Docklands Community Association, of which he is president.

Like VicShortStays, Mr Gardner agrees that the industry is operating without any clear legislative direction from government.  He said in Victoria there were multiple government departmental players and relates how a letter he sent to the Minister for Planning was “handballed” to numerous departments before being returned with an irrelevant and ignorant response.

“It’s a dog’s breakfast,” he said.  “Clearly something’s got to be done about it because, in the meantime, people are hurting because of the type of people who are being taken in,” he said.

Mr Gardner said he was sceptical about the industry’s desire or capacity to regulate itself.

“It’s pie in the sky,” he said. “It’s just not realistic. The operators down here promised to do something, but nothing improved.”

“These buildings simply weren’t built as hotels.”

He said the intra-city committee on serviced apartments would firstly undertake all the necessary research around the issue and would then attempt to have the practice “limited”.

“It would be very difficult to bring it to zero,” he said. “Advocating zero would be an extreme position.”