AirBNB has become a sore point for many owners and occupiers in strata schemes with many strata schemes adopting by-laws which prohibit short term accommodation letting. However, in the recent decision of Estens v Owners Strata Plan 11825 (Estens Case), the NSW Civil and Administrative Tribunal (NCAT) found that the owners corporation did not have the power to adopt a by-law which prohibited short term accommodation.

Section 139 of the Strata Schemes Management Act 2015 (NSW) (SSMA)

Section 139 of the SSMA restricts the type of by-laws that can be adopted by an owners corporation. As a result of section 139, a by-law cannot:

  1. be unjust, harsh, unconscionable and oppressive
  2. prohibit or restrict the devolution of a lot within a strata scheme or the transfer, lease or mortgage of a lot within the strata scheme
  3. restrict children occupying the strata scheme (exceptions apply to retirement villages)
  4. prevent people keeping assistance animals.

Application of section 139 in the Estens Case

In Estens Case, NCAT determined that the by-law in question, in seeking to ban short-term accommodation letting, was seeking to prohibit or restrict the lease of the unit, or alternatively if the letting was considered a license, was seeking to prohibit the devolution of a lot. Accordingly, NCAT found that the Owners Corporation did not have the power to make the by-law in question pursuant to section 139(2) of the SSMA and exercised its powers under section 150 of the SSMA to set aside the by-law.

In making its determination, NCAT referred to statements made in October 2016 by the NSW Legislative Committee on Environment and Planning to the effect that short term letting was not, and should not be treated as being, of a different character to traditional tenancy arrangements.

A complete copy of the Estens Case can be found here.

Estens Case follows approach taken by the Supreme Court of Victoria

Whilst not specifically referenced by NCAT, the decision in Estens Case is consistent with a decision recently handed down by the Supreme Court of Victoria in Owners Corporation PS 501391P v Balcombe [2016] VSC 384 (Balcombe Case).

In the Balcombe Case the Court held that the relevant legislation did not give an Owners Corporation power to make a rule that prohibits the use of a residential lot because the relevant legislation does not provide an Owners Corporation the power to substantially interfere with a lot owner’s proprietary rights (i.e. the right to deal with their property).

Power to prohibit AirBNB to rest with legislators

As a result of Estens Case, in NSW, an owners corporation has limited power to prevent a lot owner from using his or her lot for short term letting, such as AirBNB.

Accordingly, it appears that it is up to the NSW Government to enact legislation to allow owners cthe right to regulate short term letting within strata schemes.