Debate resumed from 25 May; motion of Ms GARRETT (then Minister for Consumer Affairs, Gaming and Liquor Regulation).
Mr NORTHE (Morwell) — It gives me pleasure to rise this afternoon to speak on the Owners Corporations Amendment (Short-stay Accommodation) Bill 2016. The main purpose of this bill is to amend the Owners Corporations Act 2006 to regulate the provision of short-stay accommodation arrangements in lots or parts of lots affected by an owners corporation. This bill supposedly seeks to address growing and ongoing concerns with regard to short-stay accommodation in Victoria.
Over these past years we have seen a significant growth in short-stay accommodation in a number of jurisdictions, including Victoria. What we have seen born out of this particular industry is much conflict between permanent residents and short-stay residents in apartment complexes. With all of this we have seen service providers such as Airbnb, Stayz and the like pop up out of nowhere, and we have seen people increasingly use their services over these past five to six years. But as I say, with this growth we have seen a number of disputes, primarily between the owners of apartments where there are permanent residents and those apartments where the owners are letting out their apartments to short-stay accommodation tenants.
That has led to a number of disputes. Within all of this we have apartment owners, owners corporations, tenants, the Victorian Civil and Administrative Tribunal, the Supreme Court and others being caught up in a number of disputes that have occurred over a period of time. Primarily those concerns relate to noise, damage to property et cetera. So it has been an issue that has grown. It has come before us very quickly, and I well and truly appreciate the fact that governments across all of Australia and indeed internationally have had to grapple with how to deal with these situations and find and mediate a proper outcome.
As was alluded to in the second-reading speech, the government established an independent panel to offer recommendations to it on ways to tackle this, and I will talk about that more in a moment. But I would also like to first refer to how Labor made an election commitment prior to the 2014 election that they would stamp out inappropriate behaviour from short-stay tenants. And indeed, looking at the Age newspaper article of Friday, 21 November 2014, headed ‘Labor to clamp down on short-term rent ‘party pads”, the opening paragraph states that:
City apartments used as ‘party pads’ by people renting from sharing websites such as Airbnb would be stamped out under a state election pledge by Labor.
I pick up those words ‘stamped out’, and I would suggest to you, Acting Speaker, and to the chamber that this legislation does not stamp out that type of accommodation; it does far from that indeed.
Nonetheless, the panel was appointed in February of 2015 by the government, and that comprised a number of different members. There were members like Simon Libbis from Subdivision Lawyers, Michael Nugent from Bencorp and also Strata Community Australia, Kristina Burke from the Victoria Tourism Industry Council, Paul Salter from the Victorian Accommodation Industry Association, a City of Melbourne representative in Angela Meinke from planning and building, Justin Butterworth from the Holiday Rental Industry Association and Roger Gardner from the Owners Corporation Network Victoria, who is also the president of the Docklands Community Association.
In digressing very slightly, a lot of the issues that have arisen with respect to short-stay accommodation have been in the CBD of Melbourne and primarily in Southbank and Docklands, where a number of these issues have arisen.
The terms of reference for the panel to have a look at short-stay accommodation spoke about a number of things and required the panel to identify and examine options for addressing the issues that maximise the amenity of living in apartment buildings while at the same time minimise interference with property rights and any negative impact on the Victorian tourism industry, on investment in Victoria and on the Victorian economy generally. Those options were to include but were not limited to a number of proposals which that panel then had to consider.
I would say at this point that, given the conundrums that one has to consider and the diversity of the panel, you no doubt conclude that there were a variety of views and opinions, and again it reinforced the point that it is not easy to make everybody happy within the context of short-stay accommodation, because there are a range of views and opinions that certainly arise out of it. One of the things that I suppose the panel and the government have to grapple with is: what right do you have as a property owner? If you have purchased your apartment on the basis of being permanent resident, does that take precedence over the apartment next to you, where an owner of that property might want to lease it out? They might want to lease it out short term, they might want to lease it out longer term or they might want to lease it out medium term. So how do you grapple with those situations? I think that is something that, reading through the report, the panel had difficulty coming to an agreement on.
There were 13 options that were part of that independent panel. There were options such as prohibiting short-stay accommodation in apartment buildings under the Building Act 1993 or the Planning and Environment Act 1987. There was talk of self-regulation and about the options with regard to doing that. There was alternative dispute resolution discussed and mediation ideas around that. They spoke about strengthening the powers of the owners corporations and amending the Owners Corporations Act 2006, particularly around owners corporations being able to make rules to either prohibit or restrict short stays, and I will talk more about that in my contribution, particularly given that this was tested legally over the course of the last few years. There were also discussion and options put forward around amending the Owners Corporation Act to make apartment owners liable for the conduct of their short-stay occupants. There were other options considered about how the City of Melbourne and municipalities might deal with and specify residential apartment buildings.
I might say at that point — again I digress — that one of the propositions put forward by many of those permanent residents and indeed owners corporations was that if you are leasing out your property to a short-term person who has caused trouble, this person does not necessarily have to abide by the building codes that exist for, say, people who stay in a motel. A motel is a different class of building from an apartment complex. That is something that municipalities have to deal and grapple with.
The City of Melbourne was at one stage caught up in legal proceedings, and it believed that its position was fair. Some options for regulation considered by the panel included empowering councils, and particularly the City of Melbourne, to deal with certain aspects of short stays. There were options around restricting the number of short-stay apartment lettings, and there was talk of registration and prescribed accommodation. There was a whole range of different elements that the panel had to consider.
When you read through the recommendations at the end of the panel’s report it is easy to identify that there were various views and opinions. I do not think there was unanimous agreement on any of those options. If I read the transcript — I will let you interpret this as best you can, Acting Speaker Pearson, particularly as you have just jumped into the chair, and I am absolutely am being selective here — the recommendations state that:
Mr Libbis, Mr Salter, Ms Meinke, Mr Nugent and Ms Burke consider that the appropriate regulatory approach to deal with unruly parties in existing CBD apartment buildings is to —
do X, Y, Z —
Mr Gardner considers that the appropriate regulatory approach is to prohibit short-stay accommodation in CBD apartment buildings.
Mr Nugent considers that a further regulatory approach is to amend the Owners Corporations Act to empower owners corporations to make rules to deal with the issue as they see fit.
Mr Butterworth considers that a regulatory approach is unnecessary and that the appropriate approach is industry self-regulation.
…
Mr Libbis, Mr Salter, Ms Meinke, Mr Nugent and Ms Burke recommend option 13 as the appropriate regulatory response to the issue although Mr Salter considers that breach notices should only be able to be served regarding breaches of rules relating to unruly parties.
It goes on and on. That is not meant to cast aspersions on the panel members, but what it is meant to do is show that this is a vexed issue which is not easily resolved. The panel members themselves, who represent a broad range of the community, business and industry, could not form a consensus when it came to dealing with the terms of reference that were put to them.
The report by the panel was to be provided to the former minister by May last year, and we have supposedly had further consultation since then, culminating in the legislation we have before us today. As I digress again, I thank the minister’s office and the department for their briefings over the past period of time in providing explanations of the bill.
I am not going to talk too much about the Grattan Institute — as my colleague to my left — but it released a report in April 2016 entitled Peer-to-peer pressure — Policy for the sharing economy. It did some work around Uber and short-stay accommodation. This was across a range of jurisdictions because, as you would appreciate, in New South Wales the short-stay accommodation sector and industry is far greater than what we experience here in Melbourne, Victoria. However, similar problems arise there. In its report the Grattan Institute said that:
… states need to do more to get the balance right between short-term use of property and the amenity of neighbours. They should give owners’ corporations more power to limit disruptions caused by short-stay letting and streamline dispute resolution. Councils should prohibit short-stay rentals only as a last resort.
The Grattan Institute went on to list a number of other findings, suggestions and recommendations, but it did note the fact that short-stay rental platforms can cause greater problems than when you deal with permanent residents. I am not sure if that is an argument that would be contested by many others, but those are the facts that have been revealed by a number of surveys done by the Grattan Institute and other organisations. That is one of the major issues with regard to the short-stay accommodation sector.
There have been many media reports over the past few years referring to party houses and people who use apartments for such purposes damaging property and causing noise, amongst a whole range of other issues. I applaud the parliamentary library, because if you go and look at the research that library staff have done with regard to this bill, they have done a fantastic job. One only has to print out the media releases and media reports on the issue and one has used a whole ream of good Australian paper to do that. I will not go through every single media report because there are many of them. But one of them is an article from the Herald Sun of 7 August 2015 under the heading ‘Party town mayhem — no action on short-stay rental behaviour’. It goes on to say that:
Wild partygoers renting CBD apartments for short stays are urinating, vomiting and stripping off in public view to the horror of regular residents.
Reports include bottles and furniture being dropped from balconies, dirty linen in hallways, nudity in pools, vandalism, stolen car parks, security concerns and lifts cluttered with cleaner trolleys.
The article goes on and on and on, and there are comments from a number of people within that article.
An article from the Sunday Age of 18 October 2015 talks about apartments and short-stay accommodation. It says in the second paragraph:
The Sunday Age understands apartments and short-stay hotels in the suburb are increasingly being used as ‘safe houses’ and party spots for those on the wrong side of the law, including a number of the city’s most influential up-and-coming drug dealers.
Criminals worried about safety but still keen to flaunt their rising wealth and power are attracted to luxury apartments in Docklands buildings where secure underground car parks and extensive CCTV systems are standard features.
That is just another element of the concerns expressed by permanent residents.
Other media includes comments by former federal Labor MP Martin Ferguson in the Herald Sun of 30 November 2015. This is from the second paragraph of an article with the heading ‘Airbnb threat to jobs’:
Martin Ferguson has warned the increasing number of short stays at apartments in the city’s growing corridor was hurting the hotel industry.
…
Mr Ferguson, chairman of Tourism Accommodation Australia has called for tighter restrictions on apartment owners offering their apartments on sites such as Airbnb.
So there are plenty of people from a range of different areas who are offering comment with regard to short-stay accommodation.
An article in the Age of 7 December 2015 under the heading ‘While Uber is deemed illegal, Airbnb gets government help’ says:
Australian Hotels Association chief executive Brian Kearney acknowledges that Airbnb is a legitimate competitor, but he’s not happy that the hosts don’t have to pay tax. ‘An Airbnb is not taxed at all. If you’re running a hotel business, you bear the full federal and state taxes.
Some would form a view that you challenge all competition that’s put in front of you. That’s probably not the way we’re looking at it — the tourist has got the right to choose whatever accommodation …
And there are other comments in the article. But it makes the point again that I made earlier, and that is that some would deem that the short-stay accommodation sector has a benefit over many of hotels and motels. They do not have to comply with the same building regulations but they also are not paying taxes and so forth, and that was outlined by Brian Kearney from the Australian Hotels Association.
Insurance Council of Australia chief executive Rob Whelan is quoted in the Sunday Age of 17 January 2016 as having said:
… would-be hosts should check with their insurer that they are covered for peer-to-peer house sharing.
‘They might not be covered for property damage and other losses and that could happen as a result of renting it out to holidaymakers …’
I will not go into all of the media releases, but you get a sense of some of the feedback from different industry providers about what their concerns are with this particular type of industry. To be fair I will talk about some of the comments from Airbnb later in my contribution.
As I said in my opening remarks, a lot of these disputes have ended up in the courts. There have been a number of legal disputes that have occurred over a period of time. The courts are grappling with how to deal with the scenario that we are confronted with. Melbourne City Council has certainly been a part of that. I will not go into every single case, but probably one of the most prominent ones that has run for about five years now is about owners of apartments in the Watergate building in Docklands joined with the City of Melbourne back in 2011 to take the owners of short-stay apartments in the Watergate building to the Building Appeals Board (BAB). That issue ended up with the BAB issuing orders requiring the owners of those apartments to comply with hotel and boarding house regulations. That decision was appealed unsuccessfully. They ended up going to the Supreme Court, where the owners of those apartments were successful in that appeal. Melbourne City Council was also part of those legal disputes and appealed unsuccessfully to the Supreme Court, costing the council, I think, $350 000 or more at the time.
There was a small win for the City of Melbourne. The apartment owners were required to comply with two key safety issues. In August 2014 the Watergate owners corporation filed a Victorian Civil and Administrative Tribunal (VCAT) action against the owners of the apartments with short-stay accommodation. Ultimately VCAT found that the owners corporation did not have the power to make or enforce a rule prohibiting short stays. The Supreme Court basically said the same thing just recently in terms of its adjudication on it. The point I am making is that we have had some of these legal disputes going for five years. The judge in the latest Supreme Court hearing made a finding that the owners corporations were unable to enforce their own rules with regard to short-stay accommodation.
There was another interesting case. An article in the Sunday Age of 3 April this year under the heading ‘Airbnb ruling a victory for renters’ — this was a case out in St Kilda — says:
Tenants have scored a win as Victoria continues to grapple with the Airbnb phenomenon, after a tribunal found a St Kilda landlord could not evict tenants who had listed their apartment on the website.
I am talking about tenants not owners. It continues:
The landlord attempted to kick out the renters earlier this year after other residents in the building informed her the apartment was being used as an Airbnb.
But in what is believed to be the first authoritative case of its kind, the Victorian Civil and Administrative Tribunal threw out Catherine Swan’s claim last week, finding Barbara Uecker and Michael Greaves had technically not sublet their apartment.
So here you go: the owner of the apartment leased out their apartment, the lessees or the tenants have then sublet it, but that is okay. It is an interesting case, one might say. Again, that just describes the vagaries of short-stay accommodation.
The bill does five or six things. It describes what is inappropriate conduct, it empowers VCAT to provide amenity compensation of up to $2000 to each resident who might be impacted, and it empowers VCAT to prohibit the use of an apartment as short-stay accommodation if the particular owner of that unit or apartment has been found guilty of inappropriate behaviour on three occasions within a 24-month period. You might be an owner of multiple apartments, but the offences, if you like, are against a particular apartment and not against the owner of the apartment, should you own apartments in other places. The bill also empowers VCAT to impose civil penalties of up to $1100 for short-stay occupants for breaches. It makes short-stay occupants and providers severally liable for damage to property, and it also adopts internal dispute resolution processes under the Owners Corporations Act 2006 and the conciliation powers of Consumer Affairs Victoria.
While the bill has been introduced into the Parliament we have had all these legal disputes that I have outlined going on. The government is also doing a review of lot of the consumer law at the moment, including the Owners Corporations Act. So one might ask, ‘Will be further changes once that review is complete?’. We certainly do not know the answer to that question.
In terms of the feedback that we have had, the number of people who are interested in this bill has been many, and I cannot go through all the feedback. Michael Nugent, who was part of the short-stay inquiry as a panel member, said that he wished to make one comment in relation to the legislation, which states:
… it empowers VCAT to make an order prohibiting the use of an apartment for short-stay accommodation, for a certain period, if short-stay occupants of that apartment have, on at least three separate occasions within 24 months, been guilty of inappropriate conduct.
His comment on that was:
From my understanding of s.169D(a), a prohibition order can be imposed against an apartment if complaints, on 3 separate occasions within a 24-month period, have been made against a provider and it is not intended to be limited to complaints in relation to solely one apartment. If that is not the case, I strongly recommend that it should be. Having three complaints against one operator is bad, but potentially there could be 6 complaints against the same operator related to 6 different apartments and the prohibition order would still not apply.
That just picks up the earlier point that I raised. There are lots of other comments from people. To be fair, Airbnb of course welcomes this legislation and what the government has said and has obviously spoken very positively about it.
However, I want to conclude in my last few minutes by just talking about one particular group who have expressed some concern with the bill and indeed whether it goes far enough. The We Live Here group is an advocacy group that says it provides a voice for residents living in strata communities and other high-density areas who might have issues that it believes are not being adequately addressed by legislation, or by government for that matter. This really originated out of the Watergate case — the legal case that I referred to earlier. They have given some examples in international jurisdictions where there is probably more movement from governments to regulate short-stay accommodation, whether it be in New York, Berlin, San Francisco, London, Paris or other places, and they refer to those cases.
Their concerns are primarily not for owners corporations but on behalf of permanent residents. They would say that the main issue they have is around the safety and security of the buildings and the residents. They are concerned that when you have short-stay tenants potentially those health and safety risks around fire safety and disabled access could be something where we see a disaster in the future because there is specifically not enough access for people. The increased wear and tear on the building, who actually pays for that? Well, it is actually the owners corporation through the owners. So wear and tear on walls and doors and lifts and so forth is one of the group’s concerns.
I raised earlier one of their other concerns, and that is people not competing on a level playing field. You have people running quasi-hotels if you like, and that is what people want to describe it as, and they do not have to pay commercial rates and the taxes and other compliance costs that would apply to hotels and motels, for example. Potentially if an event does happen, is there adequate insurance that would cover those particular owners corporations and other owners in those apartments? The inability to develop a sense of community where residents live side by side with short-stay guests obviously has a major impact on them as well.
The group has put to me some of their ideas, and I am sure it has put them to the new minister and other political parties, and one is: could there be a minimum letting period of 30 days in line with standard form residential tenancy agreements and commonwealth tax legislation with letting out an entire apartment? They are talking about the occupier letting out an entire apartment while they travel elsewhere and maybe that being confined to a maximum of 49 days per year with a minimum of 7 days per letting period. They have also suggested that where an occupier is letting out part of an apartment that they occupy that they can do that provided that the occupier is living in the property throughout the guest’s stay with no minimum length of stay, and they talk about registration and advertising as something that could be enhanced through future legislation.
Given the history of not going into consideration in detail in this particular chamber, the group simply wants an opportunity to meet with the minister to put forward its case of what it believes are genuine issues. Will the minister go out and consult with them further on these issues, with a view to making sure that they are listened to and that their ideas are put forward? Does the minister recognise the issues of noise and amenity and some of the issues that are being experienced in these apartment buildings? Will she make sure that all stakeholders are heard and consider how some of the costs and issues are going to be addressed in the future? I do commend the We Live Here group and all other stakeholders who have provided their feedback on this bill. I know it is not an easy bill, but we will reserve our right until it goes to the Council.
