You will all be familiar with some of these names. They are the new wave of businesses competing for your business and are here to stay.

But they are called disruptors and with very good reason.

As with all situations, we hear good and bad about their services and operations.

Affecting Property Management the most are Air BnB and Stayz who from some accounts are providing windfalls for property owners. By the same token, we hear of disruption to property and property damage caused by transient residents who are only there for a short time.

Properties which fall under the Strata Titles Act are most affected (although some City Councils are now looking at standard residential regulations governing short stay accommodation).

Some of the challenges for schemes are

  • Increased wear and tear on common property
  • Increased noise and nuisance complaints
  • Insurance cover may be jeopardised
  • Safety and fire evacuation protocols may need improving

Just recently there have been two instances of a Strata Company challenging the right of owners to lease out lots using these online services.

Byrne v The Owners of Ceresa River Apartments [2016] WASC 153

The Ceresa River strata scheme comprises 113 apartments in the City of Belmont. By-law 16 allows lots to be used by proprietors as a residence or by residential tenants granted occupancy rights. Several owners used an online letting site to source short-stay occupiers. The strata company applied to SAT for an order for the owners to cease allowing their lots to be used for that purpose, on the basis it was contrary to by-law 16.1

The Tribunal found that:

the word residence refers to the intent with which a lot is to be occupied, not the type of use to which it is put (that is residential versus commercial or industrial);

Residence and residential require the demonstration of an intent to reside permanently or for a substantial period, to call the place home or to have the place as a fixed address and the words residential tenant should reflect that same interpretation; and

Short stay occupiers demonstrate none of these intentions. The Tribunal ordered the owners not use their lots for short-stay accommodation. One unsuccessful owner, Mr Byrne, appealed to the Supreme Court. The Court granted leave to appeal, but the appeal was dismissed. The Court agreed with the Tribunals decision that the words residence and resident refer to an occupant who demonstrates

1 the intention to reside at the lot for a substantial period or makes the lot a permanent place of abode.

2 This Supreme Court decision has since been the subject of an appeal by the unsuccessful lot owners to the Court of Appeal.

 

Mr Byrnes appeal to the Court of Appeal concerned the proper construction of that by-law 16. The Court of Appeal found the word residence in the by-law means settled or usual abode and the effect of the by-law was that a proprietor may only use, and any occupier to whom the proprietor the lot as a settled or usual abode and not otherwise. Therefore, the two grounds of Mr Byrnes appeal related to the construction of by-law 16 were dismissed.

The Court of Appeal did allow the appeal in part to substitute the Tribunals order to require that Mr Byrne only use his lot as a settled or usual abode.  This may go to the High Court now.

AND

The Owners of Oceanique SP 52385 v MD & DK Giggins CT Pty Ltd [2017] WASAT

36 Oceaniques by-law 18 provides that a lot may be used only as a residence (with an exception). Several owners used an online letting site to source short-stay occupiers. The strata company applied to SAT for an order for the owners to cease allowing their lots to be used for that purpose, on the basis it was contrary to by-law 18. The Tribunal determined that residence in by-law 18(1) must be given the same meaning as it was given in the Ceresa River proceedings, namely that it means a permanent place of abode.3 The second issue was whether by-law 18 was operating in a way contrary to s42(3) by restricting or prohibiting the leasing of lots. The Tribunal determined that whilst the by-law might limit the number of potential lessees it was not a restriction on the leasing of lots for the purposes of s42(3).4

No appeal has been lodged

These two cases illustrate the need for Strata owners and Strata Managers to be vigilant in applying the By-Laws of the Strata Company.