VCAT passes down decision to the delight of short- term accommodation investors
An increasing trend in the apartment investor market is renting out the accommodation for short stays (e.g. Airbnb and Stayz). For those with time to manage the online bookings the rental yields can be excellent, allowing investors to purchase more investment properties or to justify their entry in to a market.
However, an opposing trend has been the increase of Owners Corporation (previously known as Body Corporates) rules prohibiting the use of units for short- term accommodation.
We have often disputed the enforceability of such clauses and have warned developers and purchasers of these apartments of the impact this restriction may have (if valid) on their resale value.
VCAT (Victorian Civil and Administrative Tribunal) has now passed down their decision on this issue to the delight of many investors.
Owners Corporations will no longer be able to prohibit the use of units for short- term rentals.
This may be a temporary resolution with the Owners Corporation and developer involved still deciding whether they should contest the decision in the Supreme Court, however many jurisdictions have now tested the same issue.
There is also the fear that legislation may be introduced. However such legislation may provide protection to residents and make this type of accommodation even more attractive to tourists and subsequently investors.