By-laws Restricting Short Term Letting
In November 2018, the QCAT Appeal Tribunal found that Bodies Corporate in Queensland could not ban or restrict lot owners from “holiday letting” their lots or using services like Airbnb. However, in April 2020, a decision of the District Court flipped the Appeal Tribunal decision on its head, leading several schemes in South East Queensland to immediately ban holiday letting. So can all Bodies Corporate in Queensland now ban Airbnb?
The Legislation
About 99% of all Bodies Corporate in Queensland are established and governed by the Body Corporate and Community Management Act 1997 (BCCMA). The remaining 1% or thereabouts fall under various pieces of legislation, including the Building Units and Group Titles Act 1980 (BUGTA).
All Bodies Corporate in Queensland have by-laws, which are basically the rules they adopt to govern how lots and common property are used. Importantly, the BCCMA contains restrictions on what can and cannot be included in by-laws. One of those restrictions is that by-laws cannot restrict a type of residential use if that use is lawful and the lot is used for a residential purpose.
Is “holiday letting” residential use?
Holiday letting is where people rent their property to holiday makers, be that for a long weekend or a week or two over Christmas. For lot owners, it allows them the flexibility to rent their property when they are not using it themselves. It can also be very lucrative, earning some lot owners hundreds of thousands of dollars per year in rental income, depending on the lot and its location.
In the matter of Body Corporate for Hilton Park CTS 27490 v Robertson [2018] QCATA 168, the Body Corporate adopted a new by-law that was designed to effectively ban holiday letting as follows:
“THAT a unit owner be permitted to let the relevant unit… provided that the term of any such tenancy occupation agreement be for a period of not less than 6 months.”
The lot owner in that case challenged the validity of the by-law on the grounds that it fell within the restrictions imposed by the BCCMA. This was because it restricted the residential use of his lot such that it could only be rented for 6 months or more. The Appeal Tribunal agreed with the lot owner and found that the phrase ‘residential use’, as defined in the BCCMA, included holiday letting as follows:
“[74] It is clear from the extrinsic material that the legislature intended that the term ‘residential’ would include holiday letting and/or short term accommodation and that is the way it should be construed in the BCCMA.”
The Fairway Island Decision
Less than 18 months after Appeal Tribunal’s decision, the District Court handed down its findings in Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68.
The facts in the Fairway Island case were very similar, where the Body Corporate adopted a new by-law that was designed to ban holiday letting as follows:
“…the Proprietor may rent out his Lot from time to time provided that in no event shall any individual rental be for a period of less than one (1) month.”
The by-law was less restrictive than the one in the Hilton case (1 month rather than 6 months), but the effect was the same given that few holiday makers rent a holiday home for more than a month.
The lot owners in the Fairway Island case also challenged the validity of the by-law because (amongst other things) it was trying to restrict the residential use of their lots such that they could only be rented out 1 month or more. Unfortunately for the lot owners, Judge Barlow QC disagreed with them (and the Appeal Tribunal), finding that holiday letting was not residential use at all. He stated:
“[45] … In its ordinary meaning, to use a building for a residential purpose does not include using it for the purpose of letting it out to others (and those others using it) for holidays or other temporary accommodation.
[46] While the dividing line between holiday or temporary use and a degree of permanence in use as a residence or abode may not be easy to draw, it is open to the body corporate to draw such a line, provided always that it does so for the relevant purpose – in this case, for the use or enjoyment of the lots and the common property. There is some element of discretion in choosing one month, or any other criterion, as the line (indeed, the period of one month itself is flexible, as different months last between 28 and 31 days). But, provided that it is not drawn capriciously, a by-law may draw such a line for the proper purposes of a body corporate and its members.”
Can all Bodies Corporate in Queensland now ban Airbnb?
In our view, the effect of the Fairway Island decision is that all Bodies Corporate in Queensland can ban holiday letting and services like Airbnb, provided the restriction is limited to periods of less than 1 month.
Some commentators disagree with this claim, and rely upon the fact that the Body Corporate in Fairway Island was established by the BUGTA, rather than the BCCMA. However, in our respectful view, that analysis fails to properly consider all of Judge Barlow QC’s reasoning and the cumulative effect of his findings.
His Honour finds, as a matter of fact and law, that holiday letting is neither residential use nor use for a residential purpose. That is the same language used in the BCCMA. As the District Court is a superior court to the Appeal Tribunal, his Honour has (for now) the final word on the law, at least until it is changed.
Final Comments
The decisions of the Appeal Tribunal and the District Court do not comfortably sit side-by-side. They refer to many of the same cases and authorities, yet arrive at completely contradictory conclusions.
It is worth nothing that Judge Barlow QC does not define what holiday letting actually is. If holiday letting is neither residential use nor commercial use, then what type of use is it? Ultimately, it does not matter in terms of outcome, because what his Honour does find is that banning holiday letting for a period of less than one month is likely not prohibited the BCCMA.
Indeed, since his Honour’s decision was released we have assisted several schemes in Queensland to create by-laws almost identical to the one in the Fairway Island case. So far, none of those new by-laws have been challenged.
Should a challenge be commenced in the usual way, either before an Adjudicator or a Referee, we consider it highly unlikely that they would disagree with the decision of Judge Barlow QC, provided the facts of the case, and the by-law, largely align with those considered in the Fairway Island case. As with most things, only time will tell.
If you would like any advice or assistance in relation to holiday letting or updating your by-laws, please contact Mario Esera, Partner at HWL Ebsworth.
If you wish to review the relevant decisions, the links are below:
Body Corporate for Hilton Park v Robertson [2018] QCATA 168
https://www.queenslandjudgments.com.au/caselaw/qcata/2018/168
Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68
https://www.queenslandjudgments.com.au/caselaw/qdc/2020/68/pdf-view
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Hi, This is very interesting. I am wondering how this might impact the situation where an inidividual owner engages in short-term or holiday letting (eg: Airbnb) in a complex where there is also a management company installed by Body Corporate, and said management company engages in holiday letting (a very common scenario in tourist areas and within city centres). I would think that any by laws that prohibited an individual from engaging in short-term or holiday letting could not be put in place without also affecting the activities of the management company, but would welcome your thoughts.
Thanks,
Paul.
Does it make any difference if the building is governed under an Accommodation Module or a Standard Module?
Hi Mario,
Thank you for your article… however I respectfully disagree with your conclusions.
You have pointed out that the Fairway case was decided under the Building Units and Group Titles Act 1980.
As a child of the seventies I sometimes reminisce about the good old ‘80’s, but there are things about that decade I don’t miss – fluro surf shorts, big hair, enormous shoulder pads and rampant discrimination… of all kinds!
The 1980 BUGT Act does not have that important protection against discrimination that the 1997 BCCM Act does – that if a lot may lawfully be used for residential purposes, the by-laws cannot restrict the type of residential use.
The 1997 Act also prohibits oppressive or unreasonable by-laws, having regard to the interests of all owners and occupiers of lots in the community titles scheme and the use of the common property for the scheme.
I have a very hard time thinking of reasons why a short term residential use, even under a month, is not ‘residential’ under the BCCM Act (with due respect to His Honour Ken Barlow), especially where that Act is littered with instances where parliament expressly dealt with short term letting as a residential use.
Indeed, that is the very reason parliament gave us the Accommodation Module!
I likewise have a very hard time coming up with reasons why it would not be oppressive or unreasonable for a Body Corporate to adopt a by-law that banned short term letting of a duration less than a month.
When I have clients ask me for that ‘solution’ I first dig into the facts to find the ‘problem’ they are trying to solve. Putting aside bias, bigotry and outright bastardry, the problem is almost always to do with the Body Corporate failing to enforce the by-laws they already have! Those being most often in relation to noise, parking and the like.
By-laws banning anything, are to me, usually just evidence of lazy thinking. They almost always also end up in a dispute that becomes a ‘lawyers picnic’.
So, with my tongue planted firmly in my cheek, I say bring on bodies corporate banning short term letting, because it will keep all of us lawyers in business for the next decade!
If council rates for apartment living are categorised therefore charged different amounts depending on whether they are permanent residential, permanent rental or short term letting why are they not categorised in by laws for obvious reasons.
Clearely holiday lets present a range of challenges for us owner occupiers.
These include increased insurance liability, maintenance costs, wear and tear, excess power, water, garbage, and lack of security, as well of over use of the pool and ‘hygiene issues’.
Short-stay guests don’t have to abide to by-laws. They drink alcohol in the pool. They dive and jump in the pool, they dump their rubbish everywhere. They hang washing on the balconies, see attached photo. They leave gates and garages open. They use vehicle gates for pedestrian traffic rather than using the pedestrian gate. They bring excess vehicle traffic and subsequently use all of the visitor parking as well as their respective lot parking.
The constant noise by tourists make residential areas unliveable by long term tenants.
An airport hotel shuttle bus comes to our gate now like a resort picking up and dropping off guests.
Those guests are given security information. We don’t know our neighbours so it is impossible to neighbourhood watch.
It would be more appropriate if we knew our neighbours and and remained residential.