The rising and largely unregulated popularity of short term leasing in high rise complex buildings has caused disruption to many strata title and company title communities.
As a long term resident in a company title or strata title building, you may have fallen victim to the anti-social behaviour that commonly arises from short-term leasing arrangements. You may have already experienced the disruption of inconsiderate behaviour, excessive noise and even security concerns. Have you raised these issues with your ‘absent’ neighbour without any success?
There have now been important changes to short term leasing arrangements which will protect your interests going forward and restore peace to your building community.
Changes to short term leasing laws
Earlier this year, we summarised the important legislative changes to the short term leasing industry and how these changes specifically impact strata communities.
Changes have already been made to the Strata Schemes Management Act 2015 (NSW) empowering an Owners Corporation to pass a Special By-law preventing short-term leasing for owners that do not treat their apartment as their ‘principal place of residence’. You can read our article here for further information on this important change and how it relates to strata buildings.
We note that the change to the Strata Schemes Management Act is only binding on strata buildings. However, we strongly recommend that Company Title buildings also look at changing their House Rules to reflect similar key changes to how short term letting is regulated (if already permitted within your Company Title building).
In our view, changes to your Company Title House Rules should be guided by the following framework:
- All shareholders are prohibited from engaging in short-term leasing unless they are an owner occupier (satisfying the principal place of residence test);
- The board of directors’ approval is required for any short-term leasing arrangement;
- Definitions are included in the House Rules so that the concept of ‘short-term leasing’, ‘principal place of residence’ is watertight and not subject to interpretation; and
- All shareholders are bound by the NSW Government’s mandatory code of conduct.
Code of Conduct will take effect from 18 December 2020
The NSW Government has gone a step further and introduced a mandatory Code of Conduct for the short-term rental accommodation industry. The Code of Conduct establishes behavioural standards expected of all participants in the short-term leasing industry capturing agents, short-term leasing platforms, hosts and guests.
Important obligations arising from the Code include:
- The host (i.e. the shareholder or unit owner) must hold insurance that covers liability for third party injuries and death on the premises. This is particularly important for company title buildings where the company is the legal owner of the land and building and might be held responsible for these types of incidents;
- The host must be contactable within ordinary hours to resolve any issues;
- The host must notify all neighbours that the unit will be used as short-term leasing accommodation;
- If the host is contacted by the owners corporation or neighbours, they must take reasonable steps to rectify any breach of the Code; and
- Guests must not create unreasonable noise, or interference to other residents in the building.
There are further important obligations contained in the Code. You can read about these important changes further by clicking on the link here which will take you to the NSW Fair Trading website. If you want to go a step further and read the Code directly, please click on the link here.
Make changes to your House Rules and By-laws now!
These changes are significant and should be used as a tool for creating a harmonious community in strata title and Company Title buildings. It is important that the changes are captured in your building’s By-laws and House Rules.
We can assist you implement clear and effective changes to your House Rules and By-laws to restore harmony back to your building.
Contact JFM LAW on (02) 9199 8597 or firstname.lastname@example.org if you have any questions in relation to this article or require advice.
 See section 137A of the Strata Schemes Management Act 2015 (NSW).
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