How Short-term letting led to an extra 1,000 residents and 8 illegal brothels in one city building
Your Strata Property
Amanda Farmer interview with Karen Stiles
March 24, 2016
Amanda Farmer: Hello and welcome. I’m Amanda Farmer and this is Your Strata Property.
Karen Stiles is the Executive Officer of the Owners’ Corporation
Network of Australia (OCN). The peak body representing owners in
residential strata. The OCN’s goal is to improve strata living through
advocacy, education, and empowerment of strata owners and residents.
Karen is also a member of the Building Professionals Board which works
to improve the quality of building construction and subdivision in New
South Wales by regulating and educating building and subdivision
certifiers across New South Wales.
Today, I’m delighted to welcome Karen Stiles to discuss with us the big issue of short-term letting in strata. Welcome Karen.
Karen Stiles: Hello Amanda. It’s fantastic to be with you.
Amanda Farmer: Lovely to have you. Karen, I want to start by asking you
if you could tell us a bit about why you think short-term letting is
such a critical issue for strata buildings and owners?
Karen Stiles: Short-term letting, that is letting out a spare bedroom
or the entire apartment while you are on holiday, is not a new
phenomenon. What is new is the digital platforms that are facilitating
the commercialization of short-term letting.
Amanda Farmer: Yup.
Karen Stiles: And now we have owners and tenants renting out entire
apartments. One person in New South Wales has more than a hundred fifty
properties that they short-term let.
Amanda Farmer: Wow!
Karen Stiles: It’s this commercialization that is destructive to communities.
Amanda Farmer: I agree completely, and you’re talking about things like Air BNB when you talk about online platforms?
Karen Stiles: Yes, there’s myriad platforms now, the growth is exponential.
Amanda Farmer: And some of our listeners will be strata tenants, they
might be owners who are letting out their properties, and I think it’s
important for them to understand from you and from a strata resident’s
perspective, what makes a good strata tenant?
Karen Stiles: A good strata tenant is a person or a family who
considers their rented home, their home, and treats it and their
neighbours with respect. There are many great tenants who are an active
part of their strata community, their vertical village if you will. But
executive committees rarely think to include them in activities or
projects; they’re kind of the forgotten majority in many cases. What a
wasted opportunity on two counts: you don’t know what talents they may
be able to contribute, and you’ve missed a chance to increase a sense
of place that leads to more harmonious and happy co-existence.
Amanda Farmer: Excellent; really great points. Do you have any
short-term letting stories to share with us? Whether they’re horror
stories or buildings that you’ve heard about who are successfully
dealing with the issue and have managed to find these great tenants
that you are talking about?
Karen Stiles: If I tell you this worked out well in the end, then
perhaps your listeners won’t end up screaming. When I talk about one
Sydney CBD building that had a thousand extra people…
Amanda Farmer: Wow.
Karen Stiles: …four hundred fifty thousand dollars a year in additional
admin costs, that’s admin and maintenance and water cost, various
illegal brothels as a result of short-term letting. The four hundred
fifty thousand, give or take, is the annual saving that they have been
able to make in each of the three years since they’ve stopped
short-term letting, and that is with a decrease in levies of five
percent each year for those three years.
Amanda Farmer: Wow, decreasing levies.
Karen Stiles: Yes, so that’s an enormous impost on the building and the owners paying the levies and the tenants paying rent.
Amanda Farmer: So true.
Karen Stiles: In simple terms, some owners and tenants were profiting
an enormous cost to their law abiding neighbours, and those two hundred
and five properties out of a building of three hundred and eighty-four
were not available for rent. So you’re driving up rents and then you’re
causing overcrowding, as people have to share limited resources to be
able to be anywhere near transport, educational facilities or work.
It’s a very tangled web we weave when greed comes before people.
Amanda Farmer: So true, and I just want to clarify for our listeners,
we talk about the term ‘short-term letting’ very casually and we are
very familiar with that term as people who are working and living in
the sector. When I think about short-term letting, I think about
tenancy for a period of less than three months. Is that the short-term
letting that you’re familiar with?
Karen Stiles: Yes, anything over ninety days of course is a residential
tenancy, but less than that can be one night or two nights.
Amanda Farmer: Definitely.
Karen Stiles: And that’s a lot of traffic in your building and a lot of
unknown faces. In that one building I was talking about, it became
almost civil war as they wrestled with the problems of this, and you
lose all your sense of community, and community is very important when
you’re wanting to create a happy home and also create an atmosphere
where people are caring for the building and each other.
Amanda Farmer: So true, great points. What are the most common
challenges you’ve noticed buildings face when it comes to dealing with
this problem of short-term letting?
Karen Stiles: Money talks. It took a dedicated executive committee
something like five years to procure the proxies that they needed to
get the building to vote to prohibit short-term letting, and then to
start the process of removing all the illegal short-term lets. They
then approved a by-law prohibiting short-term lettings in the building,
and went about the business of beefing up security and surveillance
because people get very clever at hiding and finding ways around
things. But, is that by-law legally enforceable?
Amanda Farmer: [Laughing]
Karen Stiles: Section forty-nine-one of the Strata Scheme Management
Act 1996 says, and I’ll quote, “No by-law is capable of operating to
prohibit a lease or other dealing relating to a lot.”
I’ve paraphrased there, but no by-law is capable of operating to
prohibit a lease or other dealing relating to a lot. So just this week
OCN appeared before a parliamentary inquiry into the adequacy of
regulation of short-term holiday letting.
Karen Stiles: And of course it’s not just holiday, it could be
commercial letting in terms of a corporate has an apartment for its
people, it’s a different thing again.
And that inquiry we called for owners to be given the authority to
manage the use of their common property, this rule has not changed
since 1961, it was you know world breaking then, but now in 2016, the
people who are managing this trillion dollars of the common wealth need
the authority to manage it not just responsibilities, but power to act.
Amanda Farmer: Yeah. You mentioned by-laws there and I’m certainly
getting asked more and more to draft those kind of by-laws that
prohibit short-term letting, but you’ve also mentioned something quite
creative: security and surveillance. I think that’s a really important
point. A lot of people don’t know what’s going on in their building,
and it’s the building managers, it’s the security guards who are
watching these visitors, these short-term tenants come and go, and
unless you’ve got a high level of surveillance, you’ve got security
cameras perhaps, and you’ve got building managers and security
personnel who are really on the ball, you can miss a lot of this and
yes, it’s great to have a by-law as you say, if its enforceable, but
how you are you going to prove the breach if you haven’t got the
evidence there to show that people are actually short-term tenants and
are in breach of the by-laws? So you really need to have, in my view,
those people on board and I think that’s a really good point that you
Karen Stiles: I know that particular building has installed photographic ID…
Amanda Farmer: Fabulous!
Karen Stiles: And if somebody doesn’t match, then they just immediately disable the swipe.
Amanda Farmer: That’s fantastic.
Karen Stiles: So it’s expensive but yet they save four hundred and fifty thousand a year.
Amanda Farmer: That’s it; really great point. So some of our listeners
will be wanting to know what they can do to get started with dealing
with short-term letting in their building. What are some quick actions
that they can take, maybe today straight off, to deal with this problem?
Karen Stiles: The two things that come to mind are: start a
conversation in your building, at your next general meeting, in your
newsletter, however you’re communicating to people – and I strongly
encourage people to be communicating – start the conversation about the
appropriateness or otherwise of short-term letting in the building.
Does that suit your building and its residents or not? Have the
conversation so that people are aware of where people stand on this,
you know it’s morally acceptable or morally not, or socially
acceptable, and join OCN. Take advantage of the network of people who
have vast amounts of experience on all sorts of issues. The day to day
issues and the bigger issues like this. One of the lovely things that
we were able to share, and again because of the problem with
enforcement that owners’ cooperation’s can face, is they were having
trouble getting rid of the last of the eight illegal brothels that had
come along with short-term letting, and they were saying council
couldn’t enforce it because it’s very difficult with the evidence and
it been a year and they were getting tired. So I said, “why don’t you
put two security guards at the door and tell them nobody will be
getting in or out until they are leaving with their bags packed” and
that’s what they did, and a week later that business closed down and
Now, that was creative thinking. They shouldn’t have been so
disempowered, and again we come back to its very important that owners’
corporations are not just given huge responsibilities. You’ve got
unskilled volunteers who are managing medium to large operations in
essence, they need to have authority to act well and properly in the
best interest of their community.
Amanda Farmer: The ability to choose whether they use that power or
not. But when they don’t have it, they don’t have a choice and as you
say, they’re completely disempowered and I have to agree with you, and
unable to make a decision about how they want to manage their own
community, and that’s a problem.
Karen Stiles: Yes, that’s a huge problem and its time we grew up.
Amanda Farmer: Yes, that’s right.
Karen Stiles: You know, as a country and as strata sphere.
Amanda Farmer: Yup, definitely. Well, thank you so much for that Karen.
That’s all really valuable stuff. Before we wrap up, I want to ask you
a personal question.
Karen Stiles: Yes.
Amanda Farmer: Have you got any books that you’ve read lately, that have had a big impact with on you and why?
Karen Stiles: The book that had the biggest impact on me was actually
Business as Unusual by Anita Roddick, the founder of The Body Shop.
Anita used her business to do good, to support poor communities and to
raise awareness of human rights and environmental issues, as well as
create cosmetics and shampoos and things like that. Two of my favourite
quotes: “If you think you’re too small to have an impact, try going to
bed with a mosquito in the room.”
Amanda Farmer: [laughing] I love that! Fabulous!
Karen Stiles: Yes, so the power of one. Yes, and the second one that I
love is: “The business of business should not just be about money, it
should be about responsibility, it should be about public good, not
Amanda Farmer: So true.
Karen Stiles: I think that applies to strata’s as well and strata communities.
Amanda Farmer: Definitely. So a lot of work for the sector to do, but
it’s good to know that it is in good hands certainly with you and the
OCN. So how do the listeners find out more about you and the OCN, and
is there anything you want to add before we wrap up?
Karen Stiles: They can go to our website which is ocn.org.au. There’s a
host of information there. They can certainly join very easily online.
They can also come along to our next event: we’ve got seminars coming
up, we’ve got four meetings a year at which we have expert speakers,
we’ve got a trivia night in May which should be fun.
Karen Stiles: Fantastic! Because I think you know we can talk about all
the challenges of strata living and there are some, but we also need to
celebrate that these are our homes and we can turn them into
communities quite successfully without that much effort, just a little
bit of understanding and sharing of how other people have manage
things, and a trivia night just seemed a lovely way to sort of do that
and to have a little bit of fun about strata rather than doom and gloom.
Amanda Farmer: Definitely! I agree with you completely and what a great
note to end on. Thank you so much for your time Karen. It’s been lovely
talking to you and you’ve got a lot to offer this sector and I’m sure
we will be chatting again really soon.
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