From 1 February 2019, legislative reform has come into effect which significantly impacts the responsibilities of owners who provide short-term accommodation. The concept of short-term accommodation has proven extremely successful for both owners and guests, as it allows houses, apartments, rooms and even couches to be rented for days, weeks or months. Global platforms, such as Airbnb, enable guests to view and book accommodation anywhere in the world, therefore expanding the market.
However, such arrangements may pose risks, particularly in relation to the guest’s use of the space. To address these risks, the Owners Corporation Act 2006 (Vic) (Act) has been amended to deal with potential problems, particularly guests who cause damage to property and disrupt other occupants of the complex through their use of the premises.
Guests who rent for longer durations, being more than a period of 7 days and 6 nights, are not affected by the legislation.
Joint liability implication
The amendments enable residents and owners corporations who believe a breach has occurred to bring an action seeking relief against the owner as well as the guest, subject to the owners corporation agreeing that such action should be brought. The owner and guest become jointly and individually responsible for any damage, costs or penalties imposed due to the breach, which may include fines, awards for damage to the common property areas, and compensation orders.
What constitutes a breach and breach notices
In instances where a guest:
- Creates health and safety hazards; or
- Obstructs common property; or
- Makes excessive or unreasonable noise; or
- Damages any part of the complex; or
- Interferes with another residents’ enjoyment of the common property or their own lot,
the owners corporation is entitled to issue a breach notice.
Where an owner has been issued with three breach notices for three separate instances during a period of 24-months, Victorian Civil and Administrative Tribunal (VCAT) is authorised to order that the owner is temporarily restricted from hosting any short-stay accommodation.
In addition to this, the amendments also authorise VCAT to:
- Award compensation for loss of amenity to any residents affected by the breach to a maximum of $2,000 per complaint; or
- Issues fines for a maximum of $1,100 for any breach under the Act.
What this means for owners
It is therefore important to ensure that owners are diligent when hosting short-stay accommodation. Undertaking screening practices of potential guests and imposing bonds as a condition of the accommodation are effective ways to limit and prevent instances of bad behaviour and unwanted liability.