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OVERRULED: Short term letting OK in Class 2 buildings

The Victorian Court of Appeals has ruled that the use of self-contained apartments as short term serviced apartment accommodations does not mean that the proper classification of apartments under the Building Code has changed from Class 2 to Class 3 in a decision sure to please the tourism and rental sector – albeit with a warning to maintain safe properties.

The appeal overturned the original decision of the Building Appeals Board of Victoria, who had found that Class 2 “dwellings” only applied to long term residencies. The Appeals court reversed that decision by taking the definition of ‘dwelling’ to mean ‘a place of residence or abode, whether temporary or permanent’. This broadened definition allows for short term letting of Class 2 buildings so long as there are facilities for separate occupation. This is important because Class 2 have less stringent ‘deem to satisfy’ requirements under the Building Code of Australia (BCA). These can include but are not limited to requirements for fire, exit ways and egress, disability access and emergency systems.

Despite these loosened provisions, the court was still concerned as to whether or not an overarching danger to life and safety was at stake. While there was no issue of danger or safety found in this case, it was put forward that homeowners must consider not only whether their property is compliant to the BCA requirements, but also to the need of maintaining a safe building. As was noted in the case, “…a change of use [of the building] might give rise to a danger to the life, safety or health of persons…” This may pave the way for further classification beyond the definition of ‘dwelling’ to include classifications that dictate the maintenance of a safe environment.

The decision has been sent back to the Building Appeals Board for reconsideration – though they will almost certainly ratify the decision of the appeals court. This would mean that the terminology in the Building Code will need to be interpreted differently, which will in turn affect how all Australian states and territories legislation ought to be interpreted.

The original decision was a great cause for concern for many investment owners and tourist operators. However, the outcome of this appeal well help move towards simpler requirements for short-term letting owners. Some will find that they are living in Class 2 buildings and not Class 3, simplifying requirements. While this is a great result for owners of short-term letting lots and renters, overarching safety needs still apply.

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