Airbnb and its impact on sectional titles
Airbnb is a platform very new to South Africans. It can be described as an online marketplace which lets people rent out their properties or spare rooms to guests – Airbnb subsequently takes 3% commission on every booking from the hosts, and between 6% and 12% from the guests.
This platform is so popular because guests usually get good value accommodation at a huge range of price points, from a few hundred Rands a night to thousands and often in prime locations where a normal hotel would cost infinitely more. However, what are the implications of this new platform on sectional titles?
Many bodies corporate complain that short-term tenants can be trouble makers who breach the conduct rules of the sectional title scheme and jeopardise the reputation, security and property value of the sectional title scheme. The trustees of such bodies corporate 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.
Now the interests of the bodies corporate and the interests of the owners of such sectional title units should be weighed up – it should be kept in mind that 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, within the rules.
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”) which is problematic in the sense that there are no direct rules or boundaries regulating this type of lease. Various provisions of the STSMA, The Prescribed Management Rules (“PMRs”), and Prescribed Conduct Rules (“PCRs”) refer to and bind owners and occupiers but also does not mention the term “short-term letting” directly.
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.
Section 10(4) of the STSMA is very similar to PMR 3(2), just stated in other words, and 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) also 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 possible solution could be that a new conduct rule be adopted, that states that owners are entitled to continue letting their units on a short-term basis, subject to certain conditions, for example:
a) The owner must keep proper and accurate records of the full identities, addresses and contact details of all tenants leasing their units,
b) The owner must ensure that a copy of the scheme’s conduct rules are made available to each and every tenant that lets their units,
c) 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. 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.
Another option to consider is that in the event of consistent, persistent and serious nuisance due to holiday letting at holiday destinations, the body corporate could 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.
Airbnb can be both a blessing and a curse. If you are an owner in a sectional title unit, make sure that your short-term tenants comply with all the rules or else it could be your head on the chopping block and if you are a trustee of one of the bodies corporate of such sectional titles, remember that the owners also have their rights of ownership which should not unfairly be limited.