Body Corporates and short term leasing

With many Councils around New Zealand considering/implementing commercial rates for short-term rentals such as airbnb, it raises the question of whether a Body Corporate can prevent Unit Owners from letting their unit as a short-term rental. 

Although council rates are paid by each individual unit owner, there are other implications of short-term letting which may impact on all unit owners.

For example, short-term letting may lead to increases in insurance premiums for the building, which will increase levies for all owners. There may also be building compliance or resource consent issues which arise. 

Body Corporates sometimes try to prevent owners from using their unit for short-term leasing through the Body Corporate rules. However, they need to be aware that they do not have this power in legislation. 

The Tenancy Tribunal has previously ruled that there are no powers under the Unit Titles Act to limit an owner’s right to lease. A Body Corporate cannot prohibit short-term leasing under their rules as this would not be “incidental to” a power under the Act. 

A Body Corporate may however seek to add rules that make it less viable for short term rentals to operate, such as noise restrictions, waste restrictions, or rules regarding the use of the common area.

To change the rules there must be a general meeting held where the draft rules are agreed to via an ordinary resolution of the Body Corporate.

After the rules pass, a specific notice should then be registered with Land Information New Zealand.

It is essential that you take legal advice when drafting Body Corporate rules, particularly when trying to limit short-term leasing, because any rules that are outside the scope of the new Act will result in the rules being rejected or open the Body Corporate up to challenge by the owners.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.