Short-stays are here to stay

Southbank short-stay apartment operators breathed a sigh of relief last month, when the Victorian Civil and Administrative Tribunal (VCAT) found owners’ corporation (OC) rules prohibiting the practice were invalid.

VCAT member Linda Rowland on June 29 found that the OC of the Watergate building in Docklands did not have the power to make a rule prohibiting stays of less than
30 days.

The VCAT decision paves the way for short-stay operators throughout the state as it means OCs can’t make rules preventing short-term letting.

“The decision now effectively means that owners’ corporations do not have the power to make rules that prohibit short-term letting in residential buildings,” Strata Title Lawyers CEO and Watergate OC solicitor Tom Bacon said.

“The decision impacts on all owners’ corporations throughout Victoria and affects all rules of this type made under either the 1988 or 2006 legislation,” Mr Bacon said.

With the ruling set to have widespread ramifications on apartment buildings throughout Southbank, Freshwater Place OC chair Peter Renner said the committee had noted the decision with interest.

“Short-stays have been a contentious issue at Freshwater Place, but the committee recognised owners’ rights in the use of their properties,” he said.

“We have adopted processes, which have encouraged co-operation between our building management and short-stay operators to ensure guests respect our amenities, and that they understand that owners and occupants are entitled to quiet enjoyment of their facilities.”

“Nevertheless, we await the findings of the government appointed panel and we would welcome any changes, which more appropriately distinguish between residential and hotel accommodation.”

The ruling goes against last year’s landmark decision relating to 38 Wells St, Southbank when VCAT ruled that a short-stay operator had breached OC rules and must stop operating as a serviced apartment business at the building.

The Watergate OC is yet to decide whether it will appeal the decision at the Supreme Court.

OC chair Rus Littleson said the committee was disappointed by the decision and said it favoured opportunists in the short-stay industry.

“We are most concerned that apartment property values throughout the state will suffer because of this decision. It is effectively an open invitation to opportunists to exploit legal loopholes,” Mr Littleson said.

“The short-stay industry is unregulated – any outfit can start up, hold an apartment building to ransom and damage its reputation. The State Government needs to make changes to look after residents and their investments.”

The Building Appeals Board, the Supreme Court, the Court of Appeals and VCAT, have now all tested the issue of short-term letting of apartments in the Watergate building.

Having been tested across a range of courts and tribunals, it now appears that the only other option would be the introduction of new legislation by the State Government.

In February, Consumer Affairs Minister Jane Garret appointed a panel to look at the impact of short-stay accommodation in residential buildings and make recommendations to herself and Planning Minister Richard Wynne.

The seven-member panel, which includes Watergate short-stay operator and president of the Victorian Accommodation Industry Association, Paul Salter, has now made its recommendation and the ministers are expected to announce their decision this month.

Mr Salter said he was looking forward to the decision now that the panel had completed its joint submission and applauded the decision of VCAT member Rowland.

“I would like to thank VCAT Member Ms Linda Rowland for making her decision based on the relevant laws, she indicated she would take this approach at the end of the hearing in May,” Mr Salter said.

“Her decision will enhance the fabric of the Melbourne community by enabling greater accommodation choice for consumers and it will further help to secure the city as one of the most liveable in the world, attracting both local and overseas visitors.”

The VCAT decision follows action taken against nine lot owners by the Watergate OC.

The OC alleged owners had breached OC rules through the use of their apartments as short-stay accommodation as part of Mr Salter’s Docklands Executive Apartments business.

In her written decision, published on June 29, Ms Rowlands said she proposed to dismiss the Watergate OC’s application and make final orders at a hearing on July 29