A LITTLE-USED legal provision could be used to put the squeeze on owners who rent their units out on short-term rental sites like Airbnb.

Author and apartment living expert Jimmy Thomson, founder of the website Flat Chat, has called for owners' corporations to fine landlords who don't register tenants using a "widely ignored" law.

Under Section 258 of the Strata Schemes Management Act 2015, owners must notify the body corporate of any changes to leases or subleases, including the name and address of the tenant, within 14 days.

"To be fair, this is one of the most widely ignored parts of NSW strata law," Thomson wrote in the Australian Financial Review. "But ironically, it's also one of the few that carries penalties for noncompliance - namely a maximum fine of $550.

"So what do you do? Quite simply, tell landlords they'll be taken to Fair Trading for the obligatory mediation, then to the NSW Civil and Administrative Tribunal for fines for every new resident who isn't registered.

"How do you find out in the first place? Cancel suspect flats' electronic access keys and see who comes running when they can't get into the building or up to their floor in the lift.

"In the past, this law has been ignored because it was more trouble than it was worth. But now that fines are paid into NSW owners' corporations it could be a nice little earner."


Airbnb has become the new way to sub-let your home.
Airbnb has become the new way to sub-let your home.

Chris Duggan, NSW president of Strata Community Australia, which represents 75 per cent of all strata lots in the state, said the issue of short-term letting was a complicated one currently under review by the state government.

"I'd be loath to connect the ability to fine to a solution to short-term letting," he said. "I don't see [Section 258] as a mechanism [for owners' corporations] to pick up and shoot off fines willy nilly, but it does provide a mechanism to get more detail around tenancy arrangements."

Mr Duggan said anecdotal data showed tenancy numbers were increasing significantly, to the point where they may account for more than half a building in some locations, "which means there is likely to be a lag in agents and owners providing tenancy details".

"Maintaining better records ... has a number of benefits when it's done correctly," he said. "It provides better insight into who is residing in the building, which from a management perspective allows you to communicate with them."

Faiyaaz Shafiq, a strata law expert from J.S. Mueller & Co. Lawyers, said while the statutory mechanism under Section 258 was available, he preferred to encourage owners corporations to create special bylaws banning short-term letting.

"Because bylaws have to be considered at an annual general meeting, if there is a special resolution to pass that bylaw it becomes a law of that owners corporation which the owners are bound by," he said.

"If any of those bylaws are breached, then further steps can be taken."

The company says the law 'is broken' and needs to be fixed.
The company says the law 'is broken' and needs to be fixed.

Brent Thomas, head of public policy for Airbnb, said the current rules for home sharing in NSW were "broken, outdated and need to be fixed".

"People should not be forced to get lawyers to defend their rights or navigate arcane rules that were written well before the internet even existed," he said. "The longer this regulatory uncertainty continues the worse it is for everyone in the community, with some trying to exploit the confusion.

"Our community's position remains the same - let's keep the doors open to Airbnb. Let's bring the rules for home sharing into the 21st century. Don't close the door on innovation and the benefits Airbnb brings communities with backward policies that would rob people of their rights or burden them with more red tape."

Eacham Curry, head of government relations at Stayz, said the homesharing site believed the NSW government should grant strata bodies the ability to introduce "sensible controls" for short-term rental accommodation.

"For example, a strata body should be allowed to prevent entire floors or multiple floors from being purchased by a single owner or a business for sole use as short-term rental accommodation," he said.

"However, Stayz does not support a blanket ban on short-term rental accommodation in strata schemes. Stayz also supports the introduction of a statewide registration scheme and code of conduct for all short-term rental accommodation.

"These sensible proposals will improve the short-term rental sector, without driving away the economic benefits associated with the growing accommodation sector."

Earlier this year, a NSW parliamentary inquiry into the short-term holiday letting sector concluded that the current arrangements were "fragmented and confusing".

Reforms canvassed in a subsequent options paper included possible fines for owners of out-of-control "party houses". The state government is currently considering submissions to the paper.

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