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Kicking Owners Corporation's Powers to the Kerb!

Supreme Court rules - Apartment dwellers lose out as Airbnb here to stay.

The Supreme Court of Victoria has handed down a judgment which clarifies the powers of an owners corporation in relation to prohibiting short-term letting of apartments. As reported earlier this week (see full article here), the Supreme Court decided that owners corporations do not have the power to substantially interfere with owners’ rights, in particular, passing rules forbidding lot owners from letting their properties on a short-term basis. The decision gives the green light for land owners to let their properties for short-terms stays through websites such as AirBnb.

The decision centred on the Watergate Docklands building, which in 2004 adopted a special resolution that prevented owners from letting their apartments out for less than 30 days.

The owners corporations’ concerns were bought about by friction caused in the building as there was a perception amongst owners that short-term tenants were partying in the building, causing damage to the common area, excessive noise and increasing the cost of the owners corporation on things such as security guards. The owners corporation complained that the short-term guests did not pay for their fair share of repairs and maintenance whilst they had to foot the bill.

It was found at the hearing that the relevant legislation did not demonstrate an intention to confer excessive power on owners corporations for the following reasons:

  1. the principal role of the owners corporation is to manage and administer common property;
  2. owners corporations do not have a right to overrule uses permitted under planning legislation; and
  3. owners corporations do not have the power to inhibit the conduct of land owners in relation to their own land.

We doubt this will be the last we hear of AirBnb in the courts, as owners corporations and landlords continue their crusade against the short-term accommodation industry.

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