The relevant legislation governing Owners Corporations is the Owners Corporation Act 2006.
As a general rule, an Owners Corporations’ role is to manage the common property accessible by lot owners. However, this power does not extend to infringe on a lot owner’s right to deal with their own property, including the right to rent it out to short-term tenants.
The Supreme Court case of Owners Corporation PS 501391P v Balcombe (2016) concerned an application made by an Owners Corporation against one of the lot owners, Balcombe, who had been renting out her apartment via Airbnb.
The other lot owners sought an application to restrain Balcombe from continuing to rent out the apartment to Airbnb guests, on the basis that it breached the Owners Corporations’ rules.
The Court found that an Owners Corporation did not have authority to prevent lot owners from using their apartment for short-term leasing i.e. renting their apartment to Airbnb guests.
Response from Victorian Government
In response to issues raised in cases such as Owners Corporation PS 501391P v Balcombe (2016), the Victorian State government introduced the Owners Corporation Amendment (Short-stay Accommodation) Act 2018, which commenced on 1 February 2019.
The amending Act does not prevent a lot owner from renting out their apartment; however, it does provide grounds to issue a complaint against a lot owner due to the behaviour of their short-term tenants.
Under the amending Act, VCAT now has powers to:
- compensate neighbours up to the amount of $2,000.00, due to loss caused by a short-term tenant’s behaviour;
- fine short-term tenant up to $1,100.00 for bad behaviour, such as excessive noise or damaging property;
- where there is multiple breaches by a unit holder’s short-term tenants, prohibit that lot owners from renting their apartment to short-stay tenants.
If you require advice regarding an Owners Corporation matter, you should not hesitate to contact our dispute resolution team on (03) 9311 8511.