News In Brief

Short term rental schemes in focus

Sharing ideas, history and knowledge across the world is one of the pleasant positive side effects of the electronic revolution. Having direct access to people via technology has driven the collaborative spirit in which the US and Australian industry organisations in the strata titles sector have communicated.

SCA has looked at the education and how this can be streamlined to suit the Australian strata management market and we are in the final stages of developing an industry entry level course for members. The management course is a big step in the accreditation pathway to ensure professionalism starts with the most fundamental strata management work.

The US have provided a great source of knowledge in the last 10 years from which we have taken back many more ideas than just the education. Our ties with the American counterpart to SCA, called the Community Associations Institute, have strengthened so much that an exchange is taking place, where a special delegation now regularly attends each other’s respective national conference.

In 2015 we saw three dozen Australian delegates travel to Las Vegas to see how strata and community titles are managed. The most obvious difference to Australian strata and community titles schemes is the mind boggling size many of these so called associations have. Some easily have 30,000 units (or condominiums) attached and take up the size of a whole Australian suburb. Managing these villages must be equivalent to being the manager of a local council in terms of funds management and complexity.

Participating in an overseas conference targeting the same industry as we are working in ultimately provides the opportunity to get a sneak peek of what there may be to come in Australia. While the property market varies significantly from state to state in the US, there are a few parallels we can draw, if not now then definitely in the future if development approval rates of over 40 per cent for strata titles continue.

Private short-term letting is one issue that is attracting significant attention in the US at this point in time. Stimulating the travel sector, a successful short-term letting model by private people has conquered the accommodation sector. But it seems that slowly but surely, people are awaking to the reality of this model where anyone (supposedly currently at a staggering 800,000 listings) can advertise to let out their unit or parts of it for however long they want.

The safety and well being of residents in buildings with long-term letting restrictions is being questioned, the safety of the visitors on the premises, the impact on the rental market, liability and damage to common property are coming to light as more and more people decide to stay away from traditional short term accommodation in hotels.

Interestingly, there has been a case just recently (Watts v. Oak Shores) that ruled in favour of the homeowners association (body corporate) to adopt rules and impose fees on members relating to short-term rentals of units.

It’s intriguing to see that there may even be implications on the tenancy side – will a vacancy rate of under three per cent across the state make long term tenants decide to let out their units for short periods to offset their own costs? Would renting out a unit for a night be deemed as running a commercial business? Would it mean taxes are payable? Where does nuisance start and end?

The case is setting a precedent in the US, confirming that there are higher costs associated for short-term rentals and that landlords are responsible for incurring those.

Comparing this case to the Australian market, it is easily foreseeable that this easy money making scheme will attract many takers and that sooner rather than later a similar case will be before the courts to decide on.

The issues that we expect are to some extend what we have already experienced with Schoolies and it will be interesting to see what arguments will be made for and against the model and whether it will be deemed lawful.

Rosie Clarke

Rosie Clarke is managing editor at Multimedia Publishing.

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