One of the buzzwords of recent times is the idea of the ‘sharing economy’.
Typically, this refers to people ‘sharing’ their asset and in the process getting a return out of it. One example of this is Uber (for vehicles) and another example, which this column will focus is on, is short-term letting of one’s property.
A very high profile example of this is Airbnb, although there are numerous other companies and websites providing the facility for people to offer their lots for the purposes of short-term letting. For the uninitiated, Airbnb and other sites like it contain listings from owners who offer part (e.g. a bedroom) or all of their lot for short-term accommodation, usually for a daily rate and often including a fee for cleaning or bond.
The key here is that the owner is usually handling the booking directly and without using an agent to do so. Originally, the idea of Airbnb was not just simply to derive income out of letting. Indeed, it was, and still is the case in many instances, that owners wanted to let out part or all of their lot simply so that they can meet people from other parts of the world, act as a host and have a social experience.
While this is admirable, in a community titles scheme it is apparent that having a regular turnover of visitors to the scheme can pose issues for a body corporate and other owners and occupiers. Some of those issues might include:
- Short-term occupiers not knowing fire escapes and other vital safety features;
- Concern that the by-laws for the scheme will not be made plain to these occupiers, which in-turn might result in issues around things such as noise and parking;
- Increased use of – and wear-and-tear of – common property.
The information service of my office has seen an increase in questions about whether, in general terms, Airbnb and other services like it can be operated within a community titles scheme. The short answer is ‘yes’ but there are some things to be aware of before commencing any letting of a lot.
The first thing I should point out is that this column is about issues to do with body corporate legislation. The broader issue of the overall legality and regulation of the sharing economy is not something I will address here.
If you are a lot owner who is thinking of letting out your lot, or you are a member of a body corporate with some concerns about short-term letting occurring at your scheme, you might first want to seek some qualified legal advice about your rights and responsibilities. From the general body corporate perspective, the scheme’s registered by-laws should be reviewed to determine if there is any regulation around short-term letting.
That said, it is important to point out that section 180 of the Body Corporate and Community Management Act 1997 (the BCCM Act) sets out the limitations for by-laws. One of these is: “If a lot may lawfully be used for residential purposes, the by-laws cannot restrict the type of residential use.”
So what is ‘residential use’ I hear you ask? The BCCM Act does not give a definition of this term. This is a matter about which you may need to seek independent legal advice in the context of any by-law for your particular scheme. The information service cannot provide an interpretation of by-laws; however, past adjudicators’ decisions may have dealt with these matters and you can search for these decisions at http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QBCCMCmr/.
Another source of information about what is permitted within the lot is your local government (local council). The local government may have some further information including living or business restrictions for your scheme’s particular area based on the zoning and building classifications. For example, some schemes are not permitted to be used for residential purposes at all as they are deemed commercial or industrial areas only.
For a lot owner, a consideration before commencing the operation of an Airbnb is to review existing contractual arrangements in place in your scheme. For example, some schemes restrict, through their by-laws, any other person from operating a letting agent’s business within the scheme. This can be limited to the caretaking service contractor (also referred to as the onsite manager, caretaker, resident manager) to perform and may impact others from conducting businesses like Airbnb within the scheme. Again, queries about the interpretation of a by-law or the contractual terms, should be directed to a legal practitioner.
Consideration must also be given to any licensing requirements needed to conduct Airbnb in your own lot or another person’s lot. Further information on property industry regulation can be found on the Office of Fair Trading website.
From the body corporate’s point of view, while the legislation seems clear on the topic of short-term letting, there may be some general things it can consider doing to address issues related to Airbnb and others like it, including:
- Reviewing by-laws to ensure they are current and clear;
- Making sure by-laws are well ‘advertised’, to ensure that even short-term visitors would be aware of them; and
- Perhaps something as simple as talking with lot owners who are using Airbnb to let their lot, to at least communicate some of the concerns and see if a workable solution could be found.
By discussing concerns early on, both the body corporate and the lot owner or owners can have a clear idea of what is at stake and then, what could be done to ensure that everyone’s interests can be fairly balanced.