By-law (re)defines 'Short-Term Leasing' as anything less than 6 months

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Forums Short term letting By-law (re)defines 'Short-Term Leasing' as anything less than 6 months

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  • #3074
    lazyboy
    Member

    I have read Amanda’s articles on issues relating to by-laws and short-term letting.

    NSW Fair Trading website states :
    “No by-law is capable of restricting a dealing in a lot, including restricting short-term letting”

    SSMA 2015 – Section 139 Restrictions on by-laws states :
    “A by-law must not be harsh, unconscionable or oppressive”.

    Randwick Local Environmental Plan 2012(only refers to ‘serviced apartments’) :
    http://www.randwick.nsw.gov.au/planning-and-building/planning/local-environmental-plan-lep

    However, under ‘Strata Schemes Management Act 1996 (NSW)’, the Strata Committee (in Randwick Council) put forward a by-law motion (which has already been passed via ‘Special Resolution’) which defines a ‘short term lease’ as anything less than 6 months. Moreover, the wording is vague enough to exclude any non-owners who are ‘occupying’ an apartment’ ie. even family members, friends etc., unless a 6 month lease exists. This is explicit intention to combat AirBnb etc. and disadvantage anyone who is a non-resident. All references I have seen to ‘short-term’ rentals in Sydney is anything less than 3 months.
    Please comment/advise.
    1) Can the above be legitimately done ? Why not 1 month ? Why not 2 years ?
    2) What is the right way to refer to such a by-law :
    – illegal ? unlawful ? invalid ? non-enforceable ? non-compliant with the legislation ? contestable?

    Many Thanks

    #3085
    Amanda Farmer
    Expert

    Hi lazyboy,

    Thanks for your post and welcome to the Forum.

    Direct answers to your two questions:

    1) The by-law is probably invalid – I have not reviewed the LEP, but based on what you have posted, if the Council’s planning instrument does not prohibit leases of less than 6 months, then the by-law is arguably “restricting the lease of a lot” and therefore a breach of s 139(2) of the Strata Schemes Management Act 2015.

    2) Section 139 provides that “any such by-law may be invalidated by the Tribunal”, so the correct terminology is “invalid”. If you wanted the by-law repealed, you would apply to the Tribunal under section 150, seeking “an order declaring the by-law to be invalid because (a) the owners corporation did not have the power to make the by-law or (b) the by-law is harsh, unconscionable or oppressive.” Note the two alternative arguments here. I would run both arguments. The Tribunal may like one, the other, or both.

    Amanda.

    #3114
    lazyboy
    Member

    Thanks Amanda.

    Following on from this, could you clarify a couple of things, thanks.

    1) The term ‘Short Term Letting/Leasing’ is used everywhere in the media/articles but there seems to be no definitive/legal definition. eg. is a 2 month lease with a formal ‘Residential Agreement’ regarded as a ‘short term lease’ ?

    2) As indicated, I have read your ‘Short Term’ articles & template. If indeed the ‘Fair Trading’ website is accurate that “No by-law is capable of restricting a dealing in a lot, including restricting short-term letting” then it is unclear as to under what circumstances a by-law (such as your template) could be introduced and be ‘valid’.

    3) Rather than just have the Owners Corp vote to ‘rescind’ an ‘invalid’ by-law (as described in my 1st email), does it make more sense to have a NCAT order to be actioned eg. an order to institute a by-law which simply states(as per your article)that “short term letting is not allowed in this building unless you have council consent and evidence of that consent must be provided to the Owners Corporation”. I understand a NCAT order cannot be subsequently changed without 100% Owner Corp agreement, rather than just 75% agreement via a ‘Special Resolution’.

    4) If a by-law is (clearly ?) ‘invalid’, can the case be made to the NCAT just in writing rather than have a hearing ? Or is nothing ‘black & white’ in such legal matters ?

    thanks again…

    #3117
    Amanda Farmer
    Expert

    Hi lazyboy,

    Using your numbering:

    1) The 3-month period comes from the Residential Tenancies Act. That Act provides that a stay that is for 3 months or less for the purpose of “a holiday” is not a ‘residential tenancy’: see section 8(h) here. Sure, you could draw up an agreement for a 2 month stay, but still that would not be a ‘residential tenancy’ under the Act. In this respect, section 13 is also relevant. The key is whether the premises is being used as a ‘residence’. The legal position is that a 3 month or shorter stay does not a residence make.

    2) The Fair Trading website is right, but so is my by-law. The by-law must be in line with the planning instrument. If the planning instrument prevents short term letting (and some expressly do), the by-law simply repeats the same. That way, it is the planning instrument, not the by-law, that is restrictive. This is fleshed out in my article here.

    3) NCAT won’t make a by-law unless you’ve first tried to have it made by the Owners Corporation via special resolution. So, in your example, you would first need to attempt to rescind the ‘invalid’ by-law (special resolution required), and put forward a ‘valid’ by-law in its place (yes, with wording along the lines I have recommended). If neither of those resolutions are achieved, then you go to NCAT and ask them to (a) order that the current by-law is invalid and (b) make the new by-law. I suspect, while you may have a reasonable chance of success on (a), (b) would be more controversial.

    4) You would still have to lodge your application as normal and have the matter listed for a first directions hearing (where you appear in person). At that directions hearing, you can ask the sitting Member to order that the matter be considered ‘on the papers’ per section 50(2) of the Civil and Administrative Tribunal Act. However, bearing in mind the media attention and controversy surrounding short term letting and by-laws that attempt to deal with the same, I expect the sitting member would want a fairly in depth hearing (in person).

    Amanda.

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