THE growth in the number of strata title properties in Perth has led to a potentially divisive legal issue with regard to the conversion of residential apartment buildings into short-stay apartments.
And it’s a looming regulation issue that local authorities are yet to embrace
Currently, both single owners who offer their unit at a daily or weekly rate for short-term accommodation, and large scale serviced apartment operations running out of a residential apartment complex, do so in contravention of local authority by-laws.
Most apartment owners would strongly argue that they hold the right to use the property as they wish. But the practice of renting apartments out for short-term accommodation angers many permanent residents, who say the constant stream of holiday makers through their complex increases the wear and tear on shared facilities, increases their strata fees, creates excessive noise and compromises complex security.
The wholesale conversion of residential apartments into serviced apartments without planning approval is more widespread on the east coast, but there is growing evidence that the practice is becoming more prevalent in Perth.
Strata Titles Institute of WA president Mark Atkinson said the issue was a growing problem.
He said that, under the current Strata Title Act, there were no by-laws that addressed usage of lots and unless the individual strata scheme contained a restriction on lot usage, strata managers were powerless to stop the use of residential apartments for short-stay accomodation.
“Most strata schemes are completely silent about what lots can be used for,” Mr Atkinson said.
Once a resident is operating short-term accommodation from their apartments it is difficult to implement a restriction into the strata scheme because it must pass without dissent.
Mr Atkinson said standard by-laws in the Strata Title Act could not address the issue because the act was created in 1966 for multi-storey residential apartments and had not been sufficiently amended since.
It was incumbent upon local councils to enforce the zoning of apartment buildings, he said.
The City of Perth is currently moving to prosecute the individual owners of Mont Clare Boutique Apartments, which are operating as serviced apartments.
Apartment owner Nicki Bizaine first drew City of Perth’s attention to the fact that 60 of the 80 units in Mont Clare Boutique Apartments were operating as serviced apartments despite the property being zoned permanent residential six months ago.
Ms Bizaine said that, prior to buying her apartment, she had double-checked with the City of Perth that the development was zoned residential only.
Upon moving into the property six months after completion, Ms Bizaine discovered that the developers had sold 80 per cent of the apartments to overseas investors and a number of the development company directors were managing the property ‘essentially as a hotel’.
A City of Perth spokesperson said the city was now proceeding with the prosecution of individual owners – a difficult task given that the majority are located overseas.
If the case goes to the courts it is most likely that it will become a test case for the issue.
Hotel Leisure Advisory director Alan Boys said there was not much sign of the wholesale conversion of residential apartment developments into serviced apartments in Perth.
“The concern we all have is that, when the residential market turns, these developments will be converted to serviced apartments,” he said.
Inner City Housing Development Association president Laurance Goodman said some developers were looking to sell their developments as serviced apartments because on paper they appeared to provide a higher rate of return.
What was not immediately obvious, he said, was that these apartments were not designed for commercial use, had greater wear and tear and would be an ongoing cost to investors for refurbishment.
Marion Stuart, an apartment owner at The Maltings in Northbridge who is campaigning against the operation of short-term accommodation in her complex, said raising the issue had opened up a “can of worms” for council, which now must work out how to tackle the issue.
Ms Stuart said that since going public on the issue she had received calls from apartment owners in Scarborough, South Perth, Crawley and Perth who experienced the same problem.
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