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Passing the buck on short-stay issue

26 Apr 2016

By Shane Scanlan

Residents seeking relief from sharing their apartment buildings with short-term tenants will be disappointed that Consumer Affairs Minister Jane Garrett appears ready to divest herself of the problem.

In the recently-released Consumer Property Acts Review Issues Paper No. 2, which includes a review of the Owners Corporations Act 2006, it is recommended that decisions about how apartments can be used be taken away from owners’ corporations.

The review suggests that local planning schemes might be a better way to deal with how property can be used.

“… the question of whether a particular land use is appropriate is a matter to be addressed in the planning scheme and not through rules made by an owners’ corporation,” the review states.

Prominent strata lawyer Tom Bacon says it would be a “cop-out” to pass the responsibility for short-stays to local councils and would result in a piecemeal and unwieldy response.

“The councils have only finite resources to change their plans and do not have big budgets for legal fees to battle Air BnB and others in the courts from building to building, all over the city,” Mr Bacon said. “This is not a local issue. The issue is state-wide, national even.”

Mr Bacon said Planning Minister Richard Wynne could choose to legislate that short-term letting become a controlled activity that requires a town planning permit.

“The simplest way around this is for the Minister to simply insert an amendment into the Victoria Planning Provisions by gazette, pursuant to Part 1A of the Planning and Environment Act 1987,” he said.

Mr Wynne told Docklands News he was yet to read the issues paper, but cautioned against any statewide approach that might deliver unintended consequences.

He said he reserved his response to the paper until he had learned more about it.

Also in the Consumer Property Acts Review Issues Paper No. 2, its authors support the introduction of the short-stay status of a building into an owners’ corporation statement for prospective buyers.

“The Act does not require owners’ corporation certificates to include information for prospective buyers about whether the relevant planning instrument allows the apartments in the building to be let for short-stay accommodation, and if so, how many are available for short-stay accommodation.”

“This information may be relevant to investor-buyers intending to let the apartment for short-stay accommodation, and to other buyers who do not wish to live in a building in which short-stay accommodation is permitted.”

And while Consumers Affairs gears up to pass the issue to Planning, the Grattan Institute takes the opposite view and has called for increased powers for owners’ corporations to control the issue.

In its new report Peer-to-Peer Pressure, Policy for the Sharing Economy, it says: “State governments should give owners’ corporations more powers to control short-stay rentals, possibly even the power to ban continuous, whole-premise short-stay rentals if agreed to by members.”

“The short-stay rentals can affect neighbourhood amenity, divide members of owners’ corporations and displace longer-term renters. They can make it easy to circumvent zoning and other regulations,” the Grattan Institute says.

However, it recommends that governments be taken out of any decision-making to ban them and that local government be empowered to control breaches of amenity.

“Local governments should focus on controlling disruptions and protecting amenity, not primarily on limiting short-stay rentals,” the institute says.

“Local governments should respond where disruption from a specific property is troubling neighbours. They should allow occasional or single-room short-stay rentals, and only restrict continuous whole-premise short-stay rentals if there is strong evidence they are damaging neighbourhood amenity.”

“State governments can also play a role by allowing owners’ corporations to be more effective in managing short-stay rentals.”

“They could enable owners’ corporations to hold owners liable for disruptions caused by their guests, and consider allowing owners’ corporations to control continuous, whole-premise short-stay rentals as they see fit.”

The president of the Victorian Accommodation Industry Association (VicAIA), Paul Salter, backed the Consumer Affairs approach, saying OCs had no skills or expertise in legal matters.

“It is not the role of an owners corporation to police the common property or interfere with any tenant or owner in regard to use. They have no legal standing to dictate how an owner or tenant should use their property,” Mr Salter said.

“That responsibility rests with the Victorian Government and the Planning Minister who has the resources and legal expertise to make the appropriate choices regarding land use."

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