Airbnb Hosts – what does this recent QLD case mean for you?

Airbnb Hosts – what does this recent QLD case mean for you?

Article by Jaimi-Lee Johanson from our Brisbane office.

Fairway Island GTP v Redman and Murray [2019] QMC 13

The recent decision of Fairway Island GTP v Redman and Murry, is the first of its kind in Queensland.

Magistrate AH Sinclair has determined, on an appeal to a tribunal, that a body corporate (Fairway Island) has the power to implement a by-law which prevents lot owners from letting out their lot for a term of less than 1 month. You may think this decision has implications for Airbnb hosts around Queensland, particularly if their body corporate is seeking to exclude short term letting from the scheme.

However, all is not lost for Airbnb hosts yet! Fairway Island is still governed by the Building Units and Group Titles Act 1980 (BUGTA), and not the more commonly applied Body Corporate and Community Management Act 1997 (BCCM Act). In fact, only a small percentage of body corporate schemes in Queensland are still governed by BUGTA. So, what does this mean for those few schemes?

Section 30(6) of BUGTA provides that a by-law cannot be capable of operating to prohibit or restrict a lease. Previously, it had been determined by adjudicators that a by-law preventing a lot from being rented out for even short term letting, would operate to restrict the lease.[1] In Fairway Island, that interpretation has been overturned and it was deemed that short term letting is not protected by this provision of BUGTA.

In making their decision, Magistrate Sinclair relied on the Privy Council decision of O’Connor (Senior) and others v The Proprietors, Strata Plan No 51 [2017] UKPC 45, which arose out of very similar facts and law. His Honour stated:

“It is also very difficult to see how a by-law which is lawful in terms approved by the Privy Council and which has the lawful effect it seeks to achieve could ever be objectively unreasonable… [the by-law] may be aimed at preventing short-term occupants because they are perceived as more likely to generate nuisances and be harder to regulate but the Privy Council has held that is not an inappropriate response.”

Subject to a superior Court finding otherwise, a body corporate governed by BUGTA is now able to implement a by-law preventing short term letting. Whilst this only applies to a small percentage of schemes in Queensland, this case may indicate that Courts are willing to adopt a less restrictive approach on a body corporate’s power to enact by-laws.

Short term letting and the BCCM Act

The provisions contained in the BCCM Act are different to those in BUGTA, and the interpretation in Fairway Island will have little effect on schemes governed by the BCCM Act. Under section 180 of the BCCM Act, by-laws cannot (amongst other things):

• restrict the type of residential use for a lot;
• prevent or restrict a dealing with the lot; or
• discriminate between types of occupiers.

So long as the BCCM Act contains these by-law restrictions, those body corporates governed by the BCCM Act cannot prevent short term letting. It is clear that the legislation does not confer the body corporate a power to limit residential use or the way a lot is dealt with, such as the manner in which an owner can let out their lot. This was conceded by Magistrate Sinclair in Fairway Island[2] and a number of decisions have already been handed down which indicate this is the case.[3]

This does not mean the decision in Fairway Island will have no effect at all. If a change is seen as necessary, the legislature may step in to ensure a new approach is adopted. Just as we have seen the New South Wales Government doing in the past year.

What about the rest of Australia?

In other jurisdictions around Australia, moves are being made to allow or affirm restrictions and prohibitions to short term letting in strata communities.

In 2018, the NSW government announced it would be introducing legislation permitting owners corporations to implement by-laws prohibiting or restricting short term letting. At that stage, an owners corporation could not implement a by-law that prohibited the lease of a lot within a strata scheme.[4] Unlike the decision in Fairway Island, this was interpreted to mean by-laws could not prohibit short term letting.  However, on 21 August 2018, the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW) came into force, and by special resolution, an owners corporation may now prohibit a lot being used as a short term rental, only if the lot is not the owner’s principle place of residence. That means owners cannot be prohibited from renting out a room (or part of their lot) for short term letting, if they permanently reside in the lot.

In 2017, the Western Australia Court of Appeal upheld a decision to allow a by-law which restricted short term lettings in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104. In that case, the lot owner was using Airbnb to rent out his apartment whilst a by-law restricted leasing out apartments in the scheme for less than 3 months at a time. From this decision, it became clear to strata communities in Western Australia that they can lawfully implement by-laws preventing the use of lots as Airbnb’s or similar short term lettings.

Victoria on the other hand, has not moved to allowing preventions on short term letting. The Supreme Court of Vitoria has determined that owners corporations do not have the power to regulate short term letting in an owner’s lot.[5] However, it has recognised that short term letting can cause disturbances in an apartment building if the guests are unruly. Earlier this year, amendments were made to the Owners Corporation Act 2006 (Vic), which allow compensation to be awarded if a lot has been used for unruly parties whilst being let out as short term accommodation.

Conclusion

Following the decision in Fairway Island, it will be interesting to see if the Queensland Government follows in the footsteps of New South Wales. Since the majority of schemes are governed by the BCCM Act, amendments to that legislation will be required if Queensland wants to properly move towards allowing by-laws which prevent short term letting.

At this stage, so long as a body corporate is governed by the BCCM Act, Airbnb hosts do not need to be concerned – a body corporate will not be able to implement by-laws that restrict or prohibit short term letting as a result of Fairway Island. However, this is something to keep an eye on for the future.

[1] See for example Washingtonia [2018] QBCCMCmr 256.

[2] Fairway Island GTP v Redman and Murray [2019] QMC 13 at 68.

[3] First Avenue Mooloolaba [2011] QBCCMCmr 241; Macleay Tower & Villas [2017] QBCCMCmr 12; Lynkim Lodge [2016] QBCCMCmr 419.

[4] Under the then in force s. 139, Strata Scheme Management Act 2015 (NSW).

[5] Owners Corporation PS 501391P v Balcombe [2016] VSC 384.