Short-Stay Levy Bill: what it might mean for vertical villages

The Victorian Government is currently considering amendments to the Owners’ Corporation (OC) Act 2006 that would give OCs new powers to manage short-stay operations, like Airbnb, in their residential buildings.

Part of the Short Stay Levy Bill 2024, which has passed the Legislative Assembly and is now before the Legislative Council, the proposed changes could significantly affect vertical communities, particularly those concerned with the impact of short-term rentals on security, noise, and shared amenities.

A key question is how OCs will implement these new powers. It remains unclear whether OCs will need to pass a special resolution (requiring approval from 75 per cent of lot owners or proxies) to enforce short-stay regulations, or if they can rely on their existing registered rules.

This is hoped for as many strata buildings already have rules that set minimum rental periods – typically three to six months – but which became unenforceable in Victoria, contributing to the rise of short-term stays.

The challenge is that achieving the 75 per cent vote required for a special resolution in large buildings is notoriously difficult.

This uncertainty is troubling for many OCs, as without clear guidance, the process of implementing new short-stay regulations could become cumbersome.

Another critical issue is enforcement. Even if OCs are granted new powers, monitoring and enforcing short-stay restrictions could be challenging, most especially if a residential building has entrenched short stay operators.

The COVID-19 pandemic highlighted the difficulties OCs faced in enforcing government regulations, like mask mandates and visitor limits.

OCs may, for instance, require additional resources, such as technology, to track short-term rentals, which could lead to additional costs.

Moreover, without clear consequences for non-compliance, OCs could struggle to hold short-stay operators accountable.

This could lead to disputes, legal challenges, and further complications. This leaves open the question of how OCs will police adherence to their short stay rules.

While the Short Stay Levy Bill 2024 promises to empower OCs to better manage short-term rentals, much remains unclear about how these powers will be implemented and enforced.

High-rise residents and OCs should stay informed as the legislation develops and consider discussing its potential impact within their buildings.

Effective regulation of short-term stays may improve security, reduce conflicts, and protect property values, but only if clear guidelines and enforceable mechanisms are put in place. •