Airbnb & The Law On The Gold Coast

Launched in 2008, San Francisco-based hospitality marketplace Airbnb is presenting uniquely modern hurdles for regulatory systems ill-prepared for sharing economy services. The website, which allows lot owners to rent out their spaces; whether a whole apartment in Surfers Paradise, a treehouse in the Currumbin Valley, or a bedroom in Robina, has proven to be a popular alternative to traditional models of accommodation. Airbnb boasts over 2 million listings in over 191 countries, with more than 120,000 of those listings located in Australia. The Gold Coast, with its beaches, rainforests, innumerable attractions and recently, the Commonwealth Games, is an Airbnb stronghold.

Short-term letting, which by its nature involves a high turnover of occupants, poses risks to the amenity of surrounding areas. Noise disturbances from holiday-goers and property damage are two commonly reported concerns. As share economy services such as Airbnb and Uber (a peer-to-peer ride sharing service) become increasingly popular on the Gold Coast, pressure is being applied on both the government and local councils to impose clearer regulations.

Local councils are considering how to manage issues stemming from sharing economy accommodation services. Airbnb hosts are therefore considering town planning issues to keep their listing permitted. With a lack of cohesive information available, how can affected parties determine what rules apply to their property?

The two mains areas of regulation are:

• For lots in a community title scheme, the by-laws for the scheme;
• For all lots (including those in a community title scheme), local council regulations.

Lots in a Community Titles Scheme

Where an Airbnb property is located in a community title scheme, the body corporate for the scheme can through its by-laws regulate the use of the property. The extent of that regulation is limited by legislation. In Queensland, if a lot may be lawfully used for residential purposes, the by-laws cannot restrict the type of residential use. On that basis, it was generally accepted that the body corporate could not validly prohibit Airbnb in a (residential) scheme (although of course it is not contested that the by-laws can regulate the behaviour of those using the lot, as regards to, for example, noise, use of facilities, parking and so on).

However, the recent Privy Council case of O’Connor (Senior) and others v The Proprietors, Strata Plan No. 51 [2017] UKPC 45 (21 December 2017) held that pre-existing by-laws regulating lot owners’ ability to let their units as short term accommodation should be upheld, despite a ban in legislation on by-laws operating to prohibit or restrict the leasing of a lot. In this case, lot owners in the Turks and Caicos Islands leasing their units as short term accommodation had purchased the lots subject to and with knowledge of the by-laws prohibiting them from doing just that.

Whilst not an Australian case, the legislation dealing with strata title in the Turks and Caicos Islands (the Turks and Caicos Ordinance) is modelled on the New South Wales Conveyancing (Strata Titles) Act 1961. Therefore, the decision, although not binding, is of some relevance to Queensland.

This decision has created a division of opinions regarding the power of bodies corporate to regulate and potentially prohibit the use of lots within community title schemes for short term letting. The legislation in Queensland is more specific as it relates to the regulation of short term letting than the legislation the subject of the Privy Council decision. Section 180(3) of the Body Corporate and Community Management Act 1997 (Qld) (‘the Act’) indicates that if a lot is permitted for residential use, by-laws cannot be used to enforce or restrict what type of residential use occurs within the lot.

Therefore, we suggest that the Privy Council decision would not be applied in Queensland and it seems likely that a body corporate cannot lawfully prohibit Airbnb (if the lot can otherwise be lawfully used for such a purpose), although we stress that the issue has not been judicially considered in Queensland since the Privy Council decision.

Conversely, the outcome in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104 indicated that some Australian jurisdictions are of the view that by-laws prohibiting short term letting are in fact valid and not in conflict with the legislation preventing restrictive by-laws. Interestingly, however, the Court in Owners Corporation PS 501391P v Balcombe [2016] VSC 384 found the opposite to be true. With Western Australian case law pointing towards empowering by-laws to restrict and/or prohibit short term letting and Victorian case law preventing by-laws from doing just that, it is difficult to predict how Queensland case decisions will respond to this developing point of law.

Local Council Regulations

Irrespective of whether or not a lot is in a community titles scheme, local council regulations will apply.

As local laws and city plans continue to change and update, a host can rely on the rules that were in force at the time they initiated their listing, even if they are now superseded. The Gold Coast City Plan Version 4 (the ‘City Plan’) notes at 1.1 that the objective is to set “out the city of Gold Coast’s intention for the future development in the City Plan area…” Following this, the City Plan (which came into effect on 2 February 2016) does not have retrospective power. This suggestion is substantiated by the presence of “existing lawful use rights”, which are explained at section 260 of the Planning Act 2016 (Qld).

Airbnb Hosts Prior To The City Plan

In the context of short-term residential letting, existing lawful use rights ensure that hosts; who obtained the relevant Council and State approvals at the time they initiated their operations, will continue to be protected under the Planning Act 2016 (Qld) even when the planning instruments periodically change and their property would no longer be permitted to engage in same.

In other words, Airbnb hosts who obtained a material change of use and their rental property licence (free under Gold Coast Local Law) at a time when this was permitted by their local applicable planning scheme/city plan are still protected by those instruments, despite those instruments now being superseded. For example, if an Airbnb host started letting their unit in 2012 – at which time the local planning scheme allowed for this – and the host continues to let the unit presently (despite the scheme now prohibiting this practice), the host in theory is permitted to continue under the rule of existing lawful use rights.

New Airbnb Hosts

For those new to the world of Airbnb and eager to join the sharing economy on the Gold Coast, the circumstances differ. Without existing use rights, hosts are under the control of the City Plan and will need to apply to the Gold Coast City Council for a Material Change of Use development approval (MCU). With no guarantee of success, and an undesirable price tag in excess of $8,000.00, the prospect of renting out your property now seems a lot more complicated than it used to.

There is certainly no one-size-fits-all answer for Gold Coast Airbnb hosts. Unless a host is covered by existing use rights they will need to apply for a MCU in addition to a rental property licence. Whilst the rental property licence itself is free, another important consideration for hosts is how this licence affects council rates. In essence, the minimum general council rates imposed for lots engaged in short term accommodation activities are significantly more than the rates imposed on a principal residence.

The local hosting community is unhappy with the Gold Coast City Council’s decision to enforce development application obligations for Airbnb hosts in the area. Airbnb National Manager Sam McDonagh has condemned the move, and in 2016, it was reported that two Gold Coast hosts received show cause notices from the Council after being found letting their properties without the appropriate permits. Whilst at this stage, the figures seem low, hosting an Airbnb without first obtaining the applicable planning approvals opens Gold Coast hosts up to a variety of risks and penalties down the track.

Seek Legal Advice

This article is intended to provide a brief overview of a developing area of the law. For legal advice tailored to your individual circumstances and concerns, please contact ABKJ Lawyers on 07 5532 3199.