For those wanting to offer short-stay letting the emergence of online marketplace and hospitality service providers such as Airbnb and Stayz, whilst opening a new market for property investors and owners, has created chaos not only within the Strata Community but also throughout the greater WA property market.
The first obstacle to be overcome by any owner who may want to offer their property for short-stay letting is to determine if the local council allow short-stay.
Currently there are some local councils who actively support short-stay letting, some which require an application to be made by the owner and an approval to be granted by the local council prior to commencing short-stay and some local council’s that have completely banned the practice.
For owners of Strata Titled properties there may also be strata company by-laws that need to be considered prior to commencing short-stay letting.
Many Strata Titled properties throughout WA have introduced by-laws which encourage “residential” over “short-stay” occupancy.
Whilst these by-laws may not specifically state that owners are unable to engage in short-stay letting a recent case heard initially by the State Administrative Tribunal, later appealed to the Supreme Court and then to the Court of Appeal indicated that if the by-law states that a lot is to be used as a “residence” or by “residential tenants” then short-stay letting is not allowed.
The determination was made on the basis that the words “residence” and “resident” refer to an occupant who demonstrates the intention to reside at the lot for a substantial period or makes the lot a permanent place of abode.
So what if a Strata Company wants to allow short-stay letting?
- Determine if the local council currently allows short-stay letting or if owners need to make an application to their local council to gain approval. Note each individual owner may have to make an application for their respective lot.
- If the local council allow short-stay, conduct a general meeting to ensure that no owners object to short-stay letting and approve the engagement and expenditure of a suitably qualified legal firm to draft a new Schedule 1 by-law.
- Once the by-law has been drafted conduct a second general meeting to approve the new by-law. Note as it is a Schedule 1 by-law it must be approved by resolution without dissent.
- Once the new by-law becomes unconditional, lodge the by-law at Landgate.
- Once the by-law is approved by Landgate the Owners will be able to commence short-stay letting ensuring that their tenants comply with all Strata Company by-laws, rules and regulations that apply to all other occupants of the Strata complex.
For those Strata Companies that have by-laws in place that encourage “residential” over “short-stay occupancy the case referenced above may be further appealed to the High Court.