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Editions
August 09 Edition Cover

OCs ‘betrayed’ on short-stays

31 May 2016

By Shane Scanlan

The State Government has abandoned residents hoping for intervention to regulate the use of residential apartments for short-stay accommodation.

It has introduced into Parliament amendments to the Owners’ Corporation Act, which place the responsibility for policing unruly behaviour on neighbours.

Under the new laws, individual neighbours and owners’ corporations (OCs) will be expected to seek redress from guests and owners of offending apartments at the Victorian Civil and Administrative Tribunal (VCAT).

A government press release says: “Under the reforms, for the first time apartment owners could be liable for any damage, noise or loss of amenity caused by their guests.”

“VCAT would also be given new powers to award compensation of up to $2000 to neighbours, and ban short stay apartments which are repeatedly used for unruly parties.”

“Guests could face fines of up to $1100 for a range of conduct breaches, including: creating unreasonable noise or behaving badly; causing a health, safety or security hazard; damaging common property; and obstructing a resident from using their property.”

“Short stay apartment owners may be ordered to pay neighbours’ compensation and any damage caused by their guests to common property.”

The We Live Here movement has reacted furiously to the government’s decision, accusing it of “wimping out” and turning residential homes into hotels.

Spokesperson Marshall Delves points out the impracticality of the proposed solution and said it was now “open slather” for the short-term accommodation industry in Victoria.

“Victoria let a golden opportunity slip to set an example to the rest of Australia and take a strong stance on short-term lets and Air BnBs that ruin the liveability and amenity of high-rise buildings,” Mr Delves said,

“Jane Garrett, the Minister for Consumer Affairs could have joined the likes of San Francisco, New York, Los Angeles, Berlin, London, Paris and other world cities by coming down hard on the short-term stay industry but instead chose to invite them in with open arms.”

“It will then be a matter of ‘catch me if you can’ as the proposed legislation only empowers OCs to bring proceedings in VCAT for penalties – and only after the bad behaviour and parties have occurred.”

“But why would an OC spend thousands of dollars on lawyers trying to catch and fine guests (who have most likely left Melbourne or have skipped the country) simply to chase penalties, when the proceeds of the penalties won’t be payable to the OC?  The state of Victoria collects the penalties.”

“Owners’ corporations around Victoria should feel betrayed by the decision of the Minister. The decision to announce this legislation has come in the dead of night, while the OC legislation is still under review by Consumer Affairs (legislation scheduled to be introduced in late 2017) and while OCs around Victoria are awaiting the decision of Supreme Court Justice Peter Riordan in the Watergate case which will decide whether they can enforce rules to regulate short-term letting.”

The Watergate test case on the legality of short-stay apartments returned to the Supreme Court on May 18 and 19.

Lawyers representing the Watergate owners’ corporation (OC) and its opponent, Docklands Executive Apartments, argued the merits of VCAT member Linda Rowland’s decision last June that OCs did not have the power to make rules limiting the length of stay.

The two-day hearing heard technical arguments for and against the ruling.

Justice Peter Riordan actively questioned both sides throughout the hearing and noted at the end of the hearing that he had plenty of reading and research to conduct before arriving at the conclusion, which is expected to take some months.

The State Government points out that the Victorian short-stay industry is now worth $792 million and pays $160 million in wages to 64,000 employees – an argument seized on by the Victorian Accommodation Industry Association (VicAIA).

VicAIA  praised the government for “leading Australia in understanding the value of the sharing economy”. Its president, Paul Salter, who operates Docklands Executive Apartments, has welcomed Minister Garrett’s amendments.

“The new legislation is a common sense approach and an important step towards regulatory management to ensure the responsible use of property by owners and investors in Victoria,” Mr Salter said.

“The national body, the Holiday Rental Industry Association (HRIA) has a robust national code of conduct, approved by the ACCC and adopted by all members of VicAIA. The code is a self-regulatory tool to assist the industry including landlords, property managers to manage guest behaviour,” Mr Salter said.

“We will continue to work with the government and councils to ensure the new legislation is adhered to by our members and we will actively deal with the isolated incidents of unwelcomed party pads, rogue operators and unruly behaviour.”

“This first step by the government clearly demonstrates the government is working with all parties to develop policy and legislation to keep pace with the changing ways people live, and use their homes.”

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