Real Estate: what developers need to know about the rising trend of short stay accommodation

The Victorian Parliament recently passed legislation to regulate short-term accommodation arrangements in apartments that are governed by owners corporations. The legislation will come into effect in February 2019.

In summary, the legislation now gives power to the owners corporations and affected owners to bring actions against other owners or short term occupants in relation to misbehaviour of short term occupants.

The new provisions also give power to the Victorian Civil and Administrative Tribunal (VCAT) to hear any disputes arising from short stay accommodation arrangements, impose fines on owners or occupants, or ban owners from entering into short-stay accommodation arrangements.

The legislation at a glance

The Victorian Parliament recently passed the Owners Corporations (Short-stay Accommodation) Act 2018 (Vic), which introduces new provisions to the Owners Corporations Act 2006 (Vic) (Amendments). The Amendments particularly target leases or licences for a maximum period of 7 days and 6 nights (Short-stay Accommodation).

The Amendments regulate conduct of occupants under a Short-stay Accommodation (Short-stay Occupant) by prescribing complaint procedures and power for VCAT to hear any disputes arising from Short-stay Accommodation.

Proscribed conduct of Short-stay Occupants

The Amendments prescribe certain standards to the conduct of Short-stay Occupants (Proscribed Conduct). A Short-stay Occupant is prohibited from engaging conduct that includes, but is not limited to:

• unreasonably creating noise that substantially interferes with the peaceful enjoyment of others;
• behaving in a manner likely to unreasonably and substantially interfere with the peaceful enjoyment of others;
• using a lot or the common property to cause a substantial hazard to the health, safety and security of others;
• unreasonably and substantially obstructing the use of the common property by others; or
• substantially damaging the common property.

Complaint procedures

If the Short-stay Occupant breaches the Proscribed Conduct, other owners, occupiers or a manager of the lot can make complaints to the owners corporation.

In circumstances where a compliant is made, the Amendments set out key procedures for the person making the complaint and the owners corporation to follow.

VCAT power

The Amendments give VCAT power to hear and determine a dispute in relation to an alleged breach by a Short-stay Occupant of the Proscribed Conduct.

An interested party, including (but not limited to) the owners corporation, a lot owner, or other occupiers, may apply to VCAT under the amendments.

If appropriate, VCAT may make orders that it considers fair, which include the following:

• a prohibition order banning the use of a lot for any Short stay Accommodation;
• a compensation order compensating an affected occupier a maximum of $2,000 for each breach by the Short-stay Occupant of the Proscribed Conduct; or
• an order imposing a civil penalty payable to the Victorian Property Fund a maximum of $1,100 for any breach by the Short-stay Occupant of the Proscribed Conduct.

The Amendments also provide that a provider and a Short-stay Occupant will be jointly and severally liable for, among other orders, a compensation order or civil penalty imposed by VCAT.

How will this affect existing owners?

This new legislation will assist owners and developers who are concerned with the ongoing issues arising from the increased short-stay accommodation use with respect to apartment lots.

For more information or advice on how your developments may be impacted, please do not hesitate to contact us.