A few years ago, we asked the question: Can all Bodies Corporate in Queensland ban Airbnb? The question was asked in response to the District Court decision in Redman v The Proprietors – Fairway Island GTP 107328 [2020] QDC 68. Based on that decision, we considered that Bodies Corporate in Queensland could ban short-term letting, provided it was restricted to a period of less than one month. The article we wrote back then stirred a lot of debate online, particularly amongst professionals and industry bodies that advocate for short-term holiday letting within Bodies Corporate. So what (if anything) has changed in the 4 years since that decision came out?

Summary of Fairway Island decision

Fairway Island is a gated residential scheme located in the Hope Island Resort area of the Gold Coast.

Gary Redman and Andrew Murray owned or part owned two lots at Fairway Island. They rented their lots for an average of one week at a time and generated considerable income as a result. Neither Redman nor Murray ever used Airbnb, instead renting through a local real estate agent.

On 10 August 2018, Fairway Island created a by-law that prohibited lot owners from renting their lots for less than one month, meaning that neither Redman nor Murray could continue using their lots for short-term letting.

Redman and Murray challenged the by-law before a Referee and won.

Fairway Island appealed to the Magistrates Court at Southport and had the Referee’s decision overturned.

Redman and Murray appealed to the District Court and lost.

As such, Fairway Island can (and does) prohibit renting lots for less than one month.

The Legislation

The rules that apply to schemes established and governed by the Building Units and Group Titles Act 1980 (BUGTA) are different to those established and governed by the Body Corporate and Community Management Act 1997 (BCCM Act).

BUGTA schemes account for about 1% of all schemes in Queensland. Fairway Island is a BUGTA scheme meaning, on the face of it, the decision of the District Court should have little impact on schemes established and governed by the BCCM Act.

However, the District Court decision arrives at a number of critical conclusions which, properly applied, have had significant consequences for all schemes in Queensland, including BCCM Act schemes.

Holiday letting is not “residential use”

The BCCM Act places a number of restrictions on what can and cannot be included in by-laws. Significantly, it states that by-laws cannot restrict a type of residential use if that use is lawful and the lot is used for a residential purpose. Short-term letting is lawful, and few would probably dispute that it is at least a type of residential use when conducted from a residential lot.

The BUTGA contains no equivalent restriction on by-laws, which is why the decision of the Magistrates Court did not apparently apply to BCCM Act schemes.

However, the decision of the District Court concludes that short term letting is not residential use at all. The Magistrates Court arrived at a similar conclusion, but not in the same terms as the District Court. The relevant passages of Judge Barlow KC’s decision are below:

“[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.”

In other words, the restrictions on by-laws that apply to BCCM Act schemes simply do not apply to short-term letting because it is neither residential use nor use for a residential purpose, despite being lawful.

What has changed since 2020?

Queensland is a very different place since the District Court decision in 2020.

We have suffered through a global pandemic, we have seen mass migration into the Sunshine State, and we have seen a housing shortage affect thousands of Queenslanders.

Therefore, the desire for schemes to ensure that their lots are used as homes is even more important now than it was at the time Judge Barlow KC wrote his decision.

Many local Councils have also sought to regulate, restrict, and/or discourage short-term letting by requiring special permits and changing local planning laws.

Since 2020, we have assisted dozens of schemes in Queensland to adopt new by-laws that restrict short-term letting in the same way that Fairway Island did. None of those schemes have had their new by-laws challenged, let alone challenged successfully.

If your scheme would like advice or assistance on restricting short-term letting, please contact Mario Esera at HWL Ebsworth.

Article contributed by Mario Esera, Partner, HWL Ebsworth Lawyers

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