Owners Corporation update: Short-stay accommodation arrangements soon to be regulated

Nov 1, 2018

The long-awaited Owners Corporation Amendment (Short-Stay Accommodation) Bill 2016 was recently passed by the Victorian Parliament and will come into operation on 1 February 2019 (unless proclaimed earlier).

The purpose of the new legislation, is to regulate the provision of short-stay accommodation arrangements — accommodation provided under a lease or licence for a maximum period of 7 days or 6 nights — in lots or parts of lots affected by an owners corporation.

Under the new legislation, owners corporations are able to deal with short-stay tenants who breach the short-stay standards of conduct, which includes:

  • creating unreasonable noise and behaviour;
  • causing a health, safety and security hazard;
  • damaging common property; and
  • obstructing a resident from using and enjoying the property.

Complaints and VCAT

While the complaints process remains mostly unchanged, owners corporations are only required to serve a Notice to Rectify Breach on the lot owner and short-stay provider (if not the lot owner). They may also choose to give a notice of the allegation to the short-stay occupants.

If the breach is not remedied, the owners corporation can now apply to VCAT without serving a Final Notice to Rectify Breach. The Act provides no time frame for an offending party to remedy a breach.

Under the new legislation, VCAT will have the power to make any order it considers fair, which may include:

  • restricting a lot owner from using their lot or part of their lot as short-a stay accommodation arrangement for a specified period;
  • awarding compensation of up to $2,000 for loss of amenity to neighbours; and
  • fining short-stay occupants up to $1,100 to be paid into the Victorian Property Fund.

Prohibition Order

While a Prohibition Order will prohibit a lot from being used as short-stay accommodation, it does not prohibit the lot owner or short-stay provider from continuing the short-stay arrangement in other lots. Furthermore, the specified period is not defined, leaving it open to VCAT to decide the period on a case-by-case basis.

Loss of Amenity Order

Through VCAT, lot occupiers may also make a claim for compensation for loss of amenity against a short-stay occupant for breaching the short-stay standards of conduct.

Before bringing a claim to VCAT, the aggrieved lot occupiers must first make a complaint to the owners corporation who must then decide whether or not to pursue the complaint. If the complaint is pursued, a ‘Notice to Rectify Breach’ must be served before the application for compensation can be lodged. If the owners corporation fails to issue the notice the aggrieved lot occupiers will not be entitled to seek compensation.

That said, where multiple applicants have applied for compensation against the same offender for the same rule breach, VCAT must determine whether the total sum of compensation payable by the offender is in proportion to the damage caused by the breach.

Notably, an application for a loss of amenity compensation order must be made within 60 days of the relevant breach.

In conclusion

While many questions remain unanswered, we expect that it will only be a matter of time before we see how the new legislation will benefit (or maybe even hinder) owners corporations in managing properties and in dealing with the issues surrounding short-stay accommodation.

More information

For more information, or for advice regarding the new short-stay accommodation arrangements and responsibilities of owners corporations, please contact Anton Block, Principal Lawyer and Head of Owners Corporation, on (03) 8600 8833 or ablock@kcllaw.com.au, or Deborah Andronaco, Associate, on (03) 8600 8848 or dandronaco@kcllaw.com.au.

Note: This update is a guide only and is not intended to constitute legal advice.

BACK