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Special Report: The management rights solution to short-stay problems
Special Report: The management rights solution to short-stay problems
By Grantlee Kieza, Industry Reporter
“If Airbnb is the problem, management rights is the solution.”
That’s the mantra that ARAMA CEO Trevor Rawnsley repeats, as problems with short-stay accommodation in residential buildings continue to fuel government scrutiny.
The thorny issue has prompted Brisbane’s City Council to increase scrutiny of Airbnb-style rental operators through artificial intelligence and big data.
The council has signed a contract with Deckard Technologies for the platform to underpin its crackdown on the short-term sector.
In June, the Brisbane Council announced it would hike rates by 50 percent on properties listed on Airbnb-style platforms for more than 60 days a year and details from its review of the sector are expected soon. by tenants behaving badly, especially the most common issues around noise, parking, and property damage.
“Airbnb is not the problem,’ Mr Rawnsley said, “the problem is the behaviour of the guests, and management and letting rights can nip those problems in the bud as opposed to a unit owner who might live many suburbs or even thousands of kilometres away trying to facilitate a hotel arrangement through Airbnb.
“Usually that distant owner has no real contact with the guests.
“A resident manager ensures a better selection of guests and more careful management. Some of our managers use Airbnb as an advertising platform which is a good idea, but the problem with short-stay accommodation comes from those people using Airbnb to find tenants and then letting them into a property with no supervision.
“When problems occur, these unsophisticated operators usually go to ground and take no responsibility for what’s happened.
“In a managed property if there is any sort of trouble the manager pounces on it straight away. With no resident manager in place, it’s normally the other residents who are left with the mess.”
Dr Thomas Sigler, the University of Queensland’s urban and economic geography associate professor, told the Brisbane Times that short-term rental numbers in Australia had dropped to nearly half their pre-pandemic peak, to about 266,000 as of July.
According to data provider AirDNA, some 51,000 of these are in Queensland, representing about two to three percent of the total housing stock, slightly lower than the national portion. This is lower again in Brisbane.
Airbnb’s Australia and New Zealand manager, Susan Wheeldon, told the Times she welcomed the Queensland review and the ability to contribute to any reforms.
On February 1, 2022, Noosa Council commenced a new local law for short-stay letting and home-hosted accommodation.
Under the new law, a one-off application needs to be made for all existing and new properties operating short-stay letting or home-hosted accommodation.
Annual renewal of the approval is required, and complaints are managed through a centralised 24/7 complaints hotline.
The contact person must respond to a complaint within 30 minutes of being notified.
The Strata Community Association of Queensland remains vehemently opposed to short-stay letting in residential buildings, though, saying that residents are largely powerless to act without resorting to expensive legal redress.
SCA general manager Laura Bos told Resort News: “Our position is that Airbnb is fine in tourism dedicated areas. It has no place, though, in residential areas but ultimately, it’s up to the body corporate to make that decision.
“We’ve always said the bodies corporate should be in a position to decide what they want for their communities.”
Ms Bos said the SCA had been advocating for a long time for the Queensland government to approve legislation that would allow bodies corporate to pass a bylaw banning short-term stays.
And she insists that management rights is not the solution to the problems associated with shortterm stays in residential buildings.
“We are very firm on management rights and caretaking agreements,” Ms Bos said.
“I want to make it really clear we’re not opposed to caretaking or management rights in the right areas – say tourism areas and tourism buildings. Airbnb is a booking platform and it’s a good tool where you have caretakers in buildings who run the letting for those properties. But it comes back to the matter of residential amenity. Shortstay accommodation has no place in residential buildings.
“We also believe that with the housing crisis in Queensland moving residential properties out of what is the holiday pool would obviously alleviate some of the issues there.”
Ms Bos has ready support from Trish Burt, who runs the Sydneybased organisation Neighbours Not Strangers and tells a horror story of her own battles with neighbours letting out apartments for short-stay tenants.
“I bought into a building in the Sydney CBD and even before Airbnb there used to be a huge short-term rental operation going on in there,” Ms Burt said.
“When I complained about the short-term rentals, I received more than 30 threatening messages from other owners who did not want to lose their short-stay rental incomes. There were even phone calls asking if I had funeral insurance.
“I ended up moving to another building.”
Ms Burt said she had no problem with people renting out apartments for short terms but only if those buildings were designated specifically for holiday or hotel accommodation.
“Let’s be fair to people on holidays, they want to have a good time, but they should not be doing it in residential buildings,” Ms Burt said.
“These people are on holiday mode, but they are moving in next door to people who probably have to get up and go to work in the morning and feed their children and babies.
“If you buy a serviced apartment, by law you’re not allowed to live there permanently. And if someone buys a residential property, they want a quiet home not a party house or apartment next door.”
Ms Burt cites several legal cases where judges have ruled against short-term letting in residential areas. She quotes Justice Jayne Jagot’s judgment on 187 Kent Street Pty Ltd v Council of the City of Sydney in which her honour said that mixing shortterm rentals with permanent residents is “fundamentally incompatible” and that…
“Short-term residents have no long-term interest in the maintenance of the amenity within the building or the surrounding area…”
Lawyer Michael Kleinschmidt from Stratum Legal, however, says the current outcry over short-term rentals is “a beat up”.
“Do you know how many times I’ve seen a residential building turn into a holiday resort? None,” he said.
“If the Queensland Government allowed bodies corporate to ban short-term letting there will be mortgage defaults all over the place because your ability to use that property for its highest and best use disappears with the stroke of a pen because of what your neighbours say. It’s crazy.”
Mr Kleinschmidt said any one of the Fellows of the Australian College of Strata Lawyers could prevent buyers from purchasing a property they did not realise included the capacity for short-term letting.
“Body corporate records will show you how many units are held by owner occupiers and how many are in the hands of outside real estate agents,” he said.
Queensland’s housing crisis was not due to short-term rentals, he said, so much as the mass migration of people out of Sydney in Melbourne, and that allowing bodies corporate to decide what was a residential scheme was a “lazy, dangerous policy” that could lead to bodies corporate being empowered to ban other groups that were perceived to cause problems such as “absentee (long term let) landlords, single parent households, shift workers, motorcycle riders ...”
He said one immediate solution to the problems caused by short-term tenants was simply to “enforce existing bylaws, all of which deal with noise, use of common facilities and lack of care for common property such as pools and lifts.”
Another was to privately prosecute.
He told Resort News: “When I look at who is complaining and what they are complaining about I see a few lot owners who have genuine complaints, but I see more bodies corporate with an agenda and I see stakeholder groups who are anti-management rights.
“I’ve been involved in strata for more than two decades and I can count on two hands the number of people coming to my office to say there’s a problem with short-term letting.
“It is infrequent, but the minority is making a lot of noise.
“Management rights is the best solution to short-stay problems because you have an on-site manager who becomes the judge, jury, and executioner. If there is a problem they can walk in and say, ‘stop it now … if we get one more complaint you’re out.’
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“The second solution is to enforce the bylaws against unit owners who are allowing short-term tenants to behave badly.
“You put obligations on them to provide contact details of people who are staying short term and if they don’t comply with that bylaw, you can prosecute them.
“When the ‘spiv’ from Sydney who owns his unit at Noosa gets served with a complaint and summons because his tenants were not properly supervised, he sits up and takes notice when it’s going to cost him.
“Another solution is to see what the building classification is and what are the town planning issues. There have been notable instances where authorities have brought action for people in the Planning and Environment Court because people have been using their units for the wrong purpose.”
About the current outcry Mr Kleinschmidt said:
“While I’ve met some fantastic committee members, a lot of them have come from middle management in the corporate world and they absolutely hate it when a resident manager doesn’t do exactly what they say. They then embark on World War III,” he said.
“I see all of this kerfuffle over short-term tenants as a way for certain committee members and certain stakeholder groups with an agenda to undermine the management rights model.”
Michael Woodham, who manages the Noosa Tropicana, said resident managers solved most short-stay problems because they lived on-site.
“Onsite managers know if there are four people booked into a room and 44 turn up. Problems arise when owners don’t live anywhere near the short-stay unit they’re renting out. The neighbours are the ones who suffer.”
Jo Matthews, from the Toscana at Airlie Beach, said many Airbnb landlords had no interaction with guests at all.
“But resident managers stop trouble straight away,” she said. “I’ve had cases where I’ve stopped people walking into our building because they already looked intoxicated. It’s in the best interest of owners to have resident managers in place.”
And Michael Cross, from the Gold Coast’s Dorchester on the Beach, told Resort News that while he didn’t want to deny anyone from “earning a quid from their property” he thought it was wrong for some unit owners to become “leeches on the backbone of our tourism industry.”
“If you own an apartment in my building and it’s on my holiday rent roll you have to pay $6,000 to $8000 every six months in Gold Coast Council commercial rates and you also have to pay a contribution to Destination Gold Coast,” Mr Cross said.
“The apartment undergoes routine inspections by the Fire Brigade as well as all sorts of other safety checks.
“However, if you open up an Airbnb and you don’t tell the council, your rates are only $2000 because it’s a residential apartment. So, when people use Airbnb to lease out units without notifying the council, they’re taking thousands of dollars from ratepayers and getting all the benefits of the tourism promotions without contributing.”
Strata Solve’s Chris Irons, the former Queensland Commissioner for Body Corporate and Community Management, told Resort News that management rights was only one of several possible solutions to the problems posed by short-term rentals in residential buildings. “In my experience applying a one size fits all approach doesn’t work for anything in strata,” Mr Irons said, “and particularly in such a contentious issue as this one.
“You have to look at a variety of policy levers. One that really leaps out is that bodies corporate should be empowered to have greater autonomy. If they want to prohibit Airbnb why not let them? Now it’s not possible under Queensland legislation.
“It’s a different story in every state and territory and right around the world. Different countries, different cities, and different municipalities have all taken very different approaches to Airbnb. You also have to understand what it is you’re trying to correct, if the issue is a philosophical opposition to short-term letting that’s one thing, but if the issue is something specific like noise or parking or security, then you should address those specific issues.
“It might be something as simple as reminding the owner that there are rules about noise. Communication is everything in strata.”
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