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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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