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We received this letter this week from our good friend Tom Bacon of Teys Lawyers on something that could be a landmark decision in the battle to keep short-term rentals out of residential buildings.

Hi Jimmy,

I thought you would be interested to hear about the attached decision that came out on Friday (March 22) from the Victorian Building Appeals Board (BAB).

The BAB has determined that serviced apartment activities are not permitted to operate in purely ‘residential’ buildings in Victoria. In theory, because this case involves the interpretation of the Building Code of Australia, this is a landmark decision throughout all states, not just Victoria.

I ran the case for the Watergate building in Docklands, an Owners Corporation comprising 350 residential units. 

The Appellants – Docklands Executive Apartments (DEA) – a serviced apartments operator, sought to argue their use of units for short-stay / serviced apartments were a permitted use of a residential building. 

The City of Melbourne council issued Orders against DEA, after the Owners Corporation complained about the activities of the serviced apartment guests – including party noise, damage to common property, fighting, smoking, and tampering with fire exits, fire extinguishers and elevators over a 3 year period. 

The BAB has determined that the apartments used by DEA are more correctly described as “a commercial enterprise which is conducted in a hotel style.”

Accordingly, the BAB dismissed the appeals by DEA, and the Council’s orders stand, meaning the serviced apartments activity must cease. Obviously, DEA could bring an appeal in the Supreme Court. 

This case may have ramifications for other buildings in tand around Australia if they are experiencing similar issues with serviced apartments. 

The BAB decision is clear that if a serviced apartment commercial activity is being run in a building that is purely residential (Class 2 BCA) then it runs the risk of being classified as Class 3 under the BCA and hence not permitted unless the building or parts of the building are upgraded.

You can read the Watergate ruling in full HERE.

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[Millie]

Perfect! And thank you. This is fantastic news.

[justice]

Hi,

While this is great news, I am in a situation where the building has not been classified by a surveyor as it is an old building.

From my understanding of the ruling I will have to pay the council building surveyor to classify the building as class 2 before I can argue that the building is being used for class 3 purposes. Is this true?

Why didn’t the legal team argue the case in terms of local council zoning of residential property, and how the property was being used for commercial purposes?

[CamRob]

This is excellent news I should think. I can just imagine people having to deal with a new bunch of hooligans every week coming in and out of the premises like that. You’d think that people would be more decent when they come renting homes that belong to other people, or at least to the neighbours of the place that they’re renting. Well. This is what happens when they don’t, and we’re all happy that there’s an actual enforceable ruling for it now.

[Jimmy-T]

You are responding to very old posts.

The Supreme Court overturned these decisions and apartments in Victoria are now wide open for exploitation by short-stay renters.

However, a Bill to consolidate that position was rejected by the Victorian Parliament’s upper house and they are awaiting a report from the Planning committee due on March 7th.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

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