Thinking Inside the Box

A Paddocks Sectional Title Lifestyle Blog

Short-term letting in sectional title schemes

2_gqqtux

By Dr Carryn Melissa Durham

Many people own property in sectional title schemes for investment purposes, and they let their units out to tenants for rental income. With accommodation reservation websites such as Booking.com and Airbnb.com, it has never been easier to find short-term tenants. In schemes that are located in holiday destination hotspots, city centre condominiums and seaside apartments, the landlord can collect a higher rental fee per night on a short-term basis compared to longer lease agreements.

Many bodies corporate complain that short-term tenants can be trouble-makers who breach the conduct rules, jeopardise the reputation, security and property value of the sectional title scheme. The trustees are tasked with the duty to control, manage, and administer the common property, and do all things reasonably necessary for the enforcement of the rules of the scheme. However, the trustees should not unreasonably restrict or regulate the manner in which owners use their section, and should not limit the proprietary rights of investment owners to obtain the highest rental return for their property, in the rules.

An investment owner could be adversely affected where the scheme rules restricts short-term letting of the sections in a seaside scheme. This would limit the rental pool of tenants that the owner could let the unit to, and make it difficult for owners to obtain the maximum rental for their section over the summer holidays.

The concept “short-term letting” is not defined in the Sectional Titles Act 95 of 1986 (“the STA”) or the Sectional Titles Schemes Management Act 8 of 2011 (“the STSMA”). Various provisions of the STSMA, Prescribed Management Rules (“PMRs”), and Prescribed Conduct Rules (“PCRs”) refer to and bind owners and occupiers. “Occupiers” is also not a defined term, but would include short-term tenants.

Ultimately, PMR 3(2) states that a member must take all reasonable steps to ensure compliance with the conduct rules by any tenant or other occupant of any section or exclusive use area, including the member’s employees, tenants, guests, visitors and family members. It is the duty of an owner to ensure that his or her tenants and other occupiers, including employees, guests and their family members, comply with the rules. This is a partial re-statement of section 10(4) of the STSMA, which provides that a scheme’s rules “bind the body corporate and the owners of the sections and any person occupying a section“. PCR 7(4) states that: “The owner or occupier of a section is obliged to comply with these conduct rules, notwithstanding any provision to the contrary contained in any lease or any other grant of rights of occupancy.”

The STSMA gives the owners certain duties when letting their unit, for example, section 13(1)(f) of the STSMA imposes an obligation on the owner of a unit to notify the body corporate when they let out their units. Furthermore, the Rental Housing Act 50 of 1999 states that a copy of the scheme’s conduct rules must be attached as an annexure to the lease. Furthermore, the landlord must ensure that the tenant receives a set of these rules.

A conduct rule could be adopted, that states that owners are entitled to continue letting their units on a short-term basis, subject to certain conditions, for example:

  • The owner must keep proper and accurate records of the full identities, addresses and contact details of all tenants leasing their units.
  • The owner must ensure that a copy of the scheme’s conduct rules is made available to each and every tenant that lets their units.
  • The owner must ensure that each tenant sign an undertaking to comply with the scheme’s conduct rules.

The scheme rules should address the specific actions or behaviour of the short-term tenants, rather than to target the investment owners with blanket bans or overly restrictive rules. If the only problem the trustees see, in this situation, is a threat to scheme security, I suggest that they motivate the making of a new conduct rule that addresses access control and security. The body corporate should identify the undesirable activities that result from the short-term letting, and establish whether this high-turnover occupancy process unreasonably interferes with the use and enjoyment of the common property or sections by other owners or occupiers, and whether the activity causes a nuisance.

If there is consistent, persistent and serious nuisance due to the holiday letting, the body corporate should adopt a penalty rule. The trustees can then fine, and otherwise act against, an owner on account of the actions of his or her short-term tenant, when they act in a manner alleged to be a breach of the rules.

If you have experienced any problems with short-term letting in your scheme, and require our assistance with drafting conduct rules, please contact consulting@paddocks.co.za.

Image source: static.domain.com.au

 

Advertisements

11 comments on “Short-term letting in sectional title schemes

  1. John Counihan
    March 30, 2018

    This doesn’t sound right! Conduct Rules are there for all to see when one considers buying in a complex. Surely if there is a specific Rule prohibiting short term rentals, B&Bs etc, one is obliged to comply in to the future? In our case we specifically looked to such a Rule to ensure a lifestyle in the complex free from the trials and tribulations associated with short term rentals. How can the “right to earn a living from the short terms rentals opportunity” over ride my lifestyle right? If a buyer wants that opportunity, ensure that the Rules do not preclude it before buying in to a complex.

    • Paddocks
      April 23, 2018

      Hi John,

      Thank you for your comment. We can assist with drafting rules that address particular concerns relating to short-term letting.
      To answer any questions you have, we have an exclusive online club, to help you with your community scheme queries. Find out more here.

      Kind regards
      Paddocks

    • Vadi
      April 25, 2018

      Yes, I fully agree with John Counihan. ST is specific for residential use, how can investors make this a business venture like B&B,Self Catering& Airbnb short change iother owners who live in the complex. Wouldn’t this affect the owner resident investment. His/Her safety & Security becomes compromised. Long term tenants is not a problem.

  2. Tim
    March 28, 2018

    Does subletting in contravention of a lease agreement usually entitle the owner to an unjustified enrichment claim towards the tenant?

    • Paddocks
      April 23, 2018

      Hi Tim,

      Thank you for your comment. Our experts are unable to answer questions on this platform. However, we do have an exclusive online club, to help you with your community scheme queries. Find out more here.

      Kind regards
      Paddocks

  3. charles cooper
    December 20, 2017

    This is a most unsatisfactory position for owners who do not and have no intention of letting short term or long term.Such owners are paying levies to susbisidse a business run by another owner which seem unjust and unfair

    • John Whitfield
      March 28, 2018

      There is no place for such short-term letting in a residential scheme. Any owner who elects to let out their unit in such a way is showing total disregard for their neighbours. You can put in place multiple rules to try and regulate the conduct of the occupants, but they will be ineffective. Security and enjoyment by other residents will definitely be compromised.

    • Jean Borgstrom
      March 28, 2018

      Absolutely agree. Short term renters as a whole contribute nothing to the hard work of the running of the building, if ind all fines “unfair and discriminatory”, suggest those who complain should “go and live in a cottage in the country” while the owners who live in the block are stressed most of all by the security risk of really unvetted tenants staying 1-3 nights. The renters also expect security officers to act as concierge which is a role they are neither paid nor trained to do.

  4. Michelle
    December 20, 2017

    Please could you advise wher I can obtain the exact warding of owners’ responsibility to the BC with respect to short term tenants. I believe there is a paragraph 13f(?) that deals with this?
    My BC is threatening to fine me if I do not give all contact details of each airbnb guest BEFORE they move in. I have tried to explain that apart from names ans car licence détails à local SIM card if rarely purchased by my tenants until after they have moved in.
    I feel I am being targeted and need to be fully informed in order to hold my own with what I see as unfair treatment and harassment.
    Kind regards

    • Paddocks
      February 9, 2018

      Good day Michelle,
      Thank you for your comment. We would love to help but unfortunately do not give free advice. Please see below for how we can help:
      – We offer consulting via telephone for R390 for 10 minutes. Please call 0216863950.
      – We have Paddocks Club, an exclusive online club, headed by Prof Graham Paddock, to help you get answers to your questions about community schemes: http://club.paddocks.co.za/
      – We offer a Free Basics of Sectional Title short course starting soon: http://www.paddocks.co.za/courses/free-basics-of-sectional-title/

      Kind regards,
      Paddocks

    • Jean Borgstrom
      March 28, 2018

      You can’t have it all ways. The body corporate needs to know who is coming in for security reasons.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Follow us on Twitter

Address:

+27 (0)21 686 3950
Mon - Fri
8am - 5pm

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 488 other followers

%d bloggers like this: