IS UNLAWFUL SHORT TERM ACCOMMODATION USE OF RESIDENTIAL LOTS CONTRIBUTING TO THE SEQ HOUSING CRISIS?

One of the most vexing issues in Queensland’s strata industry is the compatibility of short-term holiday accommodation with long-term residential living.  A prominent building in South Brisbane that was developed for long-term residential living became the latest battleground for this industry issue.

Background

The scheme’s management rights operator filed an application in the Planning & Environment Court to challenge whether it needed body corporate consent to make a development application to change the use of dozens of the lots in the scheme to regularise their use for short-term accommodation (as a hotel).

To put the proceeding in context – the management rights operator had asked for body corporate consent to its intended development application and been refused.  Brisbane City Council refused to acknowledge that the development application was properly made without body corporate consent, so the management rights operator brought the application in the P&E Court.

The 274 residential lots in the building could be used for “Multi-Unit Dwelling”: a use of premises as a principal place of longer-term residence by several discrete households, domestic groups or individuals irrespective of building form.

The management rights operator argued that body corporate consent was not needed because the proposed use of common property that is incidental to short-term accommodation is consistent with ordinary uses and established functions.  In other words – the common property is going to be used in substantially the same way irrespective of whether lots in the scheme or occupied for long or short periods.  People will still be walking through the common hallways and foyers, they will still swim in the pool, and they will still park their car, irrespective of whether they will be in the unit for a short or long period.

The proceedings were initially filed by the management rights operator against the Brisbane City Council. Given the potentially dire impacts of the decision on the Body Corporate, Grace Lawyers was engaged by the body corporate to join the proceeding and lead evidence about the significant and undesirable impact this hotel business run by the management rights operator was having on their community.

Outcome

In Spice Apartments Residential Management Pty Ltd ATF SARM Trust v Brisbane City Council [2023] QPEC 2, the Court dismissed the management rights operator’s application because short term accommodation results in a different and more intense use of common property, so body corporate consent is needed for the development application

The Court found at [10]:

I am satisfied on the facts before me that the conducting of the Short-term accommodation use by the applicant has resulted in not only a material intensification of the use of the common property but also damage to the common property in a way that is unlikely to have occurred had this use not been (apparently unlawfully) conducted on the land. It is the Short-term accommodation use that attracts people in large numbers who bring luggage and require clean linen for a brief period. They are the people who may require extra beds in their units during their stay. They appear to regularly include individuals who do not care where they park, how much noise they make and whether they upset residents of the buildings. They are, on the evidence before me, a demographic regularly looking for a good time, in circumstances where they are not staying for a long time.

Grace Lawyers previously wrote about whether a body corporate can restrict the long or short term use of a lot back in 2020. We explored the importance of a scheme’s development approval, explained that the use of a lot in contravention of that approval is an offence, and cautioned that an approval could be amended by applying for a material change of use.

That is what was attempted in Spice Apartments.  However, the body corporate acted in a considered and strategic way over several years to preserve the amenity of its long-term residential building.

Wider application

Many may read the Spice Apartments decision and find its conclusion unsurprising – short-term holiday use of a lot is very different to long-term residential use of a lot.  That was also a key component of the District Court’s decision in Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68 at [45]:

Short-term use of a house by holiday makers or other persons seeking short-term accommodation is different from longer term residential use, even though it may be difficult to draw a clear dividing line. 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.

You can read more about the Fairway Island decision here.

So why can’t bodies corporate take more direct and effective action to regulate and prevent short-term use of lots in their scheme?

Section 180(3) of the Body Corporate and Community Management Act 1997 (Qld) (BCCMA) provides that if a lot may lawfully be used for residential purposes, then a body corporate cannot restrict the type of residential use.  The prevailing and authoritative view of this section is that short term accommodation is a “type of residential use”, at least under the BCCMA: Body Corporate for Hilton Park v Robertson [2018] QCATA 168.Yes, I appreciate that seems rather confusing.  But the ordinary meanings of words used in legislation give way to the statutory context in which they are used.

Current challenges

If Queenslanders want “residential” to mean the same thing in community titles schemes governed by the BCCMA as it does in any other context to enable bodies corporate to make by-laws restricting short-term accommodation, then:

• the legislation needs to change; or
• a body corporate governed by the BCCMA needs to be ready and willing to make a by-law restricting short-term accommodation use of a lot in its scheme and then defend it all the way to Queensland’s Court of Appeal, hoping a different conclusion is reached.

The Queensland Government has commissioned a review of the BCCMA through the Community Titles Working Group to ensure the legislation continues to meet the needs of residents and other stakeholders in strata communities.  So, there is a real opportunity to legislative change.

Southeast Queensland is currently experiencing a housing crisis.  Addressing the unlawful use of lots for short-term accommodation will be one immediate way to provide some relief for this crisis.  Correcting the misuse of units developed for long-term residential purposes will increase the stock available for ordinary Queenslanders who are struggling to find a home, let alone an affordable one.

FAQs

• Spice Apartments is a body corporate governed by the BCCMA. How was it able to stop short-term letting if the BCCMA says short-term accommodation is a type of “residential” use?

The BCCMA says that about a body corporate’s ability to make a by-law.  The use of a lot in any community titles scheme is still subject to the scheme’s development approval.  So instead of focusing on the by-laws, a body corporate could instead focus on enforcing the scheme’s development approval or asking the local government to enforce it.

• How can I find out what my scheme’s development approval says?

Start by getting a copy of the scheme’s development approval.  That could be done through the local government’s online search portal (PD Online), paying for a planning certificate, or getting a copy from the body corporate’s records (if it holds it).  Then take legal or planning advice on the uses that are permitted.

• Why was Fairway Island able to introduce a by-law to restrict short term accommodation?

Fairway Island is governed by the Building Units and Group Titles Act 1980 (Qld), not the BCCMA. Different legislation, different outcome.

• If a lot in our scheme can only be used under the development approval for long-term residential purposes, how is body corporate consent obtained to apply for a material change in use to allow short-term accommodation?

You ask for it by submitting a motion.  Subject to what is on the register of reserved issues, the committee may be able to give that consent.

• We are confident that the development approval only allows lots to be used for long-term residential purposes, and our committee will never consent to someone applying for a change to the local government. What can be done to maintain that position?

Maintain your positions on the committee in perpetuity and be ready to lobby against any motion submitted to a general meeting for that consent to be provided to a MCU application.  But in reality – times change, people change, priorities change, and committees change.  So, a long-term strategy needs to be implemented to guard against a hole in the net.  It starts with making it a restricted issue for a committee to decide whether to give body corporate consent to a change application.

• Lots in our scheme can be lawfully used for long- and short-term accommodation. The holidaymakers can be problematic.  Is there nothing that can be done?

There remain many options.  Some by-laws can be put in place to better regulate, without restricting, short term accommodation.  A body corporate can also work closely with its management rights operator to address the issue.  A benefit of resident management rights is that the operator is onsite to address issues as they arise.

Article Contributed by Grace Lawyers