By-laws Restricting Short Term Letting

August 11, 2021

In November 2018, the QCAT Appeal Tribunal found that Bodies Corporate in Queensland could not ban or restrict lot owners from “holiday letting” their lots or using services like Airbnb. However, in April 2020, a decision of the District Court flipped the Appeal Tribunal decision on its head, leading several schemes in South East Queensland to immediately ban holiday letting. So can all Bodies Corporate in Queensland now ban Airbnb? Read on to find out more. 

The Legislation 

About 99% of all Bodies Corporate in Queensland are established and governed by the Body Corporate and Community Management Act 1997 (BCCMA). The remaining 1% or thereabouts fall under various pieces of legislation, including the Building Units and Group Titles Act 1980 (BUGTA). 

All Bodies Corporate in Queensland have by-laws, which are basically the rules they adopt to govern how lots and common property are used. Importantly, the BCCMA contains restrictions on what can and cannot be included in by-laws. One of those restrictions is that by-laws cannot restrict a type of residential use if that use is lawful and the lot is used for a residential purpose. 

Is “holiday letting” residential use? 

Holiday letting is where people rent their property to holiday makers, be that for a long weekend or a week or two over Christmas. For lot owners, it allows them the flexibility to rent their property when they are not using it themselves. It can also be very lucrative, earning some lot owners hundreds of thousands of dollars per year in rental income, depending on the lot and its location.    

In the matter of Body Corporate for Hilton Park CTS 27490 v Robertson [2018] QCATA 168, the Body Corporate adopted a new by-law that was designed to effectively ban holiday letting as follows: 

“THAT a unit owner be permitted to let the relevant unit… provided that the term of any such tenancy occupation agreement be for a period of not less than 6 months.” 

The lot owner in that case challenged the validity of the by-law on the grounds that it fell within the restrictions imposed by the BCCMA. This was because it restricted the residential use of his lot such that it could only be rented for 6 months or more. The Appeal Tribunal agreed with the lot owner and found that the phrase ‘residential use’, as defined in the BCCMA, included holiday letting as follows: 

“[74]  It is clear from the extrinsic material that the legislature intended that the term ‘residential’ would include holiday letting and/or short term accommodation and that is the way it should be construed in the BCCMA.” 

The Fairway Island Decision 

Less than 18 months after Appeal Tribunal’s decision, the District Court handed down its findings in Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68. 

The facts in the Fairway Island case were very similar, where the Body Corporate adopted a new by-law that was designed to ban holiday letting as follows: 

“…the Proprietor may rent out his Lot from time to time provided that in no event shall any individual rental be for a period of less than one (1) month.” 

The by-law was less restrictive than the one in the Hilton case (1 month rather than 6 months), but the effect was the same given that few holiday makers rent a holiday home for more than a month.  

The lot owners in the Fairway Island case also challenged the validity of the by-law because (amongst other things) it was trying to restrict the residential use of their lots such that they could only be rented out 1 month or more. Unfortunately for the lot owners, Judge Barlow QC disagreed with them (and the Appeal Tribunal), finding that holiday letting was not residential use at all. He stated: 

“[45]  … In its ordinary meaning, to use a building for a residential purpose does not include using it for the purpose of letting it out to others (and those others using it) for holidays or other temporary accommodation. 

[46]  While the dividing line between holiday or temporary use and a degree of permanence in use as a residence or abode may not be easy to draw, it is open to the body corporate to draw such a line, provided always that it does so for the relevant purpose – in this case, for the use or enjoyment of the lots and the common property. There is some element of discretion in choosing one month, or any other criterion, as the line (indeed, the period of one month itself is flexible, as different months last between 28 and 31 days). But, provided that it is not drawn capriciously, a by-law may draw such a line for the proper purposes of a body corporate and its members.” 

Can all Bodies Corporate in Queensland now ban Airbnb? 

In our view, the effect of the Fairway Island decision is that all Bodies Corporate in Queensland can ban holiday letting and services like Airbnb, provided the restriction is limited to periods of less than 1 month. 

Some commentators disagree with this claim, and rely upon the fact that the Body Corporate in Fairway Island was established by the BUGTA, rather than the BCCMA. However, in our respectful view, that analysis fails to properly consider all of Judge Barlow QC’s reasoning and the cumulative effect of his findings.  

His Honour finds, as a matter of fact and law, that holiday letting is neither residential use nor use for a residential purpose. That is the same language used in the BCCMA. As the District Court is a superior court to the Appeal Tribunal, his Honour has (for now) the final word on the law, at least until it is changed.  

Final Comments 

The decisions of the Appeal Tribunal and the District Court do not comfortably sit side-by-side. They refer to many of the same cases and authorities, yet arrive at completely contradictory conclusions.  

It is worth nothing that Judge Barlow QC does not define what holiday letting actually is. If holiday letting is neither residential use nor commercial use, then what type of use is it? Ultimately, it does not matter in terms of outcome, because what his Honour does find is that banning holiday letting for a period of less than one month is likely not prohibited the BCCMA. 

Indeed, since his Honour’s decision was released we have assisted several schemes in Queensland to create by-laws almost identical to the one in the Fairway Island case. So far, none of those new by-laws have been challenged. 

Should a challenge be commenced in the usual way, either before an Adjudicator or a Referee, we consider it highly unlikely that they would disagree with the decision of Judge Barlow QC, provided the facts of the case, and the by-law, largely align with those considered in the Fairway Island case. As with most things, only time will tell.  

If you would like any advice or assistance in relation to holiday letting or updating your by-laws, please contact Mario Esera, Partner at HWL Ebsworth. 

If you wish to review the relevant decisions, the links are below: 

Body Corporate for Hilton Park v Robertson [2018] QCATA 168 

Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68 

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