Justice Pepper Sprays in the Eyes of Holiday-Home Owners

25/09/2013

Landlords renting out holiday homes for short-term stays beware – you may be doing so illegally!

A recent ruling by Justice Pepper in Dobrohotoff v Bennic will significantly influence local tourism in Gosford in NSW and the fallout could be catastrophic for any other NSW local area where self-contained short-term holiday rentals are a major cog in the local economy.

In Dobrohotoff’s case the respondent, Ms Bennic,  was ordered to stop letting her property for short-term holiday stays because that use is a breach of the Gosford Planning Scheme and the Environmental Planning and Assessment Act.

Her property is in a residential zone. As Ms Bennic’s clients generally stayed at most only a week, Justice Pepper confirmed that such short stays did not constitute the use of the the house as a 'dwelling house'. A 'dwelling house' was the only relevant development permissible in the zone.

The Dobrohotoff family who lodged the application for an injunction lived next door to the property. They had approached the council on numerous occasions with complaints about a steady stream of loud lewd renters frequenting the property. The property had become a hot spot for Bucks’ and Hens’ nights, and others engaged in short-term stays were also inclined to party.  

Indeed the Dobrohotoffs believed on occasion ‘strippers, or worse’ visited the property! Knowing full well the contributions these debaucherous tenants contribute to council coffers, Gosford Council refused to intervene. It had reached the point where the Dobrohotoffs had to vacate their house during weekend and holiday periods. Finally the Dobrohotoffs took their complaints to the Land and Environment Court.

So, you ask, is my holiday home the investment I though it was? Well you better hope your local council has taken steps to amend any similar local planning ambiguities, because following Justice Pepper’s spray it is no longer ambiguous. A 'dwelling house' in a residential zone cannot be used in the manner many property investors intend.

If 'holiday rentals', or a similar term, is not defined by the instrument, and where undefined or unidentified uses are prohibited, this judgment will apply.

While this serves as a reminder to all potential property investors, and solicitors advising, to check zoning specifications before purchase, it is also a wake-up call for all NSW local councils whose economies rely on short-term-stay tourism. Prudent councils should act to provide certainty for property owners. Shoalhaven City Council, for example, has already done so, by inserting a specific clause in their draft LEP allowing the use of dwellings for short-term rental accommodation. The question now is whether that clause will survive scrutiny by the NSW State Government.
 

For more information or assistance in relation to this article, please call Townsends Business & Corporate Lawyers on (02) 8296 6222.