Short stay accommodation

The Independent Panel on short-stay accommodation’ has published its final report. The Panel made recommendations that:

  • OCs be able to serve a ‘notice to rectify breach’ on the person offering the accommodation (whether the owner of the property, the lessee or agent) regarding breach of OC rules by short-stay occupants; and
  • VCAT be able to make an order on the breach notice that the apartment is not allowed to be used for short-term stays for a period of time, or until it is sold.

It is said that this would empower OCs to deal with the problem using existing powers and procedures under the OC Act, and make the provider of the short-stay accommodation responsible for their occupants.  In a practical sense, it may be difficult and costly for the OC to use the notice system.

The government is now consulting on the report.

In the meantime, the validity of a rule against short term stays in the current legislative scheme was examined by the Tribunal in Owners Corporation PS501391P v Balcombe [2015] VCAT 956.

[Update – this VCAT decision was upheld on appeal in Owners Corporation PS501391P v Balcombe [2016] VSC 384 based upon largely the same reasoning.]

[Update – New provisions relating to complaints and procedures for short-stay accommodation arrangements were inserted into the Owners Corporations Act 2006 and came into force in February 2019]

The proceeding was concerned with short term letting of eleven apartments in the Watergate building at Docklands.

In earlier proceedings, Melbourne City Council had sought to argue before the Building Appeals Board, the Supreme Court and the Court of Appeal that use of the Watergate apartments was contrary to the Building Code of Australia classification approved in the occupancy permit.  Council ultimately failed.

The Tribunal concluded that short term stays were not prohibited by the occupancy permit or the planning permit.  It also held that the OC could not make a rule to prohibit using the lot for short term stays.

It appears that an OC cannot prevent specific uses of a lot (for example, it cannot pass a rule imposing a blanket prohibition on an owner using the lot for business purposes) but it can pass a rule that seeks to prevent hazard, nuisance or noise from a lot.  The rule must focus on regulating the result of the activity, not the activity itself.


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