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August 09 Edition Cover

Serviced apartment critics take heart

31 Aug 2010

By Shane Scanlan

Docklands opponents of serviced apartments have taken heart from news from Paris and New York where owners there are being prevented from short-term renting.

Serviced apartments have been a vexed and emotional issue in Docklands, particularly in NewQuay where some owner-occupiers are exploring legal avenues in an attempt to stamp them out.

Condor and Nolan Owners Corporations have allocated tens of thousands of dollars to commission some high-level legal drafting of replacement clauses for their owners corporation agreements.

But critics say they are wasting their time and money as they are unlikely to get the required 85 per cent of owners’ approvals to enforce a change to the agreements.

This is because of low participation rates and the fact that many owners are reaping greater returns from their property on the short-term serviced apartment market, which has turned about 25 per cent of the precinct into a hotel.

It is estimated that there are 250 serviced apartments of this type in Docklands, with about five major operators ­– the biggest being the MAB Corporation-owned Grand Mercure.

Owner-occupiers complain about the type of visitor this practice attracts and cite examples of rowdy and drunken behaviour, violence and property damage.

They say that a “no party” policies employed by serviced apartment operators have helped, but there are still many breaches which end up with 3am evictions.

“We didn’t buy here to end up living in a hotel,” is a typical response from owner occupiers.

At the same time, they are reluctant to speak about the issue publicly and fear that drawing attention to the issue will devalue their properties.

They also claim that some owners don’t know that their apartments are being used for this purpose.

Serviced apartment operators, however, point to increased property values for all because of the practice.  They say that the owner-occupiers can’t have it both ways.  They also point to the support that visitors bring for local restaurants.

It is understood that NewQuay owners corporations were seeking a united approach on the issue of funding the legal activity but that only Conder and Nolan were prepared to provide cash, with a small $5000 “in principle” contribution from the combined Boyd, St Elia and Palladio Owners Corporation.

The Arkley Owners Corporation voted against contributing to the legal fund as it was felt it had little chance of success.  It has made separate approaches to the Minister for Planning, Justin Madden, seeking a legislative solution to the problem.

Late last month New York City passed laws which will ban leasing residential apartments for less than 30 days.  The new laws, which take effect next May, mirroring the situation in Paris.

New York Mayor, Michael Bloomberg, is quoted as saying: “When housing designated for permanent occupancy is illegally converted into a hotel, unsafe conditions are created, the residential character of city neighbourhoods is harmed and the supply of much-needed units of housing is depleted.”

Local opponents of serviced apartments ask at which point does a residential apartment block become a hotel.  “Is it 30 per cent serviced apartments?  50 per cent?  When?”

They point to the extra wear and tear on common facilities, without extra contribution to owners corporation fees.  They also ask whether owners of these apartments should be charged commercial rates.

MAB Corporation has banned serviced apartments above level 12 in its currently under construction, 22-storey H1 development, and will not allow competing serviced apartment operators into the new building at all.

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