Strata body corporate can't stop Airbnb rentals, only local Sydney councils

Strata by-laws that impose restrictions on short-term letting, including Airbnb, in residential-only Sydney apartment blocks are invalid and only councils have the authority to take these steps, according to NSW Fair Trading.

The watchdog has modified its Strata Living handbook to warn strata committees and owners corporations that they can’t pass by-laws restricting holiday letting just weeks before a discussion paper on new holiday letting legislation is released. 

“Section 139 (2) of the Strata Schemes Management Act 2015 states that no by-law can prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot,” a Fair Trading spokesperson for Innovation and Better Regulation Minister Matthew Kean was quoted by Fairfax Media.

The statement was immediately welcomed by peer-to-peer letting platform Airbnb, which said it protected the rights of people to share their own homes.

“Strata laws prevent an owners corporation restricting an owner from letting their lot, including short-term letting,” says a recent amendment to Strata Living. 

“The only way short-term letting can be restricted is by council planning regulations,” it said.

A government spokesperson explained that this means by-laws telling owners that they must abide by local council zoning restrictions are invalid as only local councils can enforce their zoning.

By-laws supporting local zoning have been used by some strata schemes to work around the restrictions on by-laws directly banning short-term letting.

“The local council ‘owns’ the zoning regulation,” the spokesperson told Fairfax Media. “Only they can enforce it.”

Head of public policy ANZ at Airbnb, Brent Thomas added that it was unfair to “discriminate against apartment dwellers, and prevent them from participating in the sharing economy in the same way house dwellers can”. 

However, the ruling has not gone well with strata managements. Reports say local councils are receiving between zero complaints in a year to 10 a month in Sydney areas where short-term letting is most prevalent.

While the due process to turn a discussion paper into a Bill and then passed by Parliament could take a year, the ministry advised that owners can only pursue the issue of short-term letting through their local council.

A senior executive of Owners Corporation Network, which represents strata owners, Karen Stiles said the OCN was awaiting the NSW parliament amending laws to allow owners to effectively manage their communities or “we will see a summer of chaos in Sydney apartment blocks”.

“Local council engagement with this is patchy, to say the least.”

A spokesperson for City of Sydney Council – where residential letting is defined as three months or more – denied that they have backed off from pursuing non-compliant holiday lets but said they had very few complaints, two of which were currently being  pursued.

“The City carefully addresses all reports about short-term letting but has received complaints from only a small number of people,” said the spokesperson.

In contrast, Waverley Council – which covers Bondi Beach – receives about 10 complaints about holiday letting a month, while in Randwick there has been no council action against non-compliant short-term or holiday letting over the past summer.

A spokesperson for Woollahra Council said they had only had a handful of complaints in the past nine months but two of the properties concerned were now applying for official bed and breakfast permits.

They said the complaints were specific such as late-night noise or misuse of waste bins.

Other states have been facing similar issues as well. Last year, research by a Queensland body corporate company indicated that one in three Queensland strata residents were concerned about apartment security from Airbnb guests.

Commercial short-stay companies like Airbnb are expected to deprive the Victorian Government of more than $14 million in uncollected GST.