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AIRBNB: A LOVE-HATE THING

‘AirBnB’, the internet platform that enables property owners to list rooms, apartments and houses for rental, has very fast become a familiar term although triggering mixed emotions. Understandably, where ownership in a residential estate involves living in close proximity to neighbours, the guests making use of the AirBnB facility are likely to impact to a lesser or greater degree on the usual activities in the estate and this can cause friction.  Our offices receive quite a number of queries regarding short term leasing of premises, particularly in sectional title and homeowners’ association schemes (HOA) via the AirBnB online platform.  The concerns range from irritation and queries regarding legality thereof, on the one hand, to questions regarding SARS’ interest in the activity on the other.

Is it allowed in my scheme?

The short answer is, yes, in principle, provided the scheme’s rules or governance documentation do not prohibit it.  One should differentiate between various types of community schemes in South Africa, the most common being sectional title schemes and homeowners’ association developments. 

Note the following pointers:

  1. Sectional Title Schemes are governed by both the Sectional Titles Act and the new Sectional Title Schemes Management Act and are required to have a set of rules in place when they are established. The rules are, by law, automatically binding on all owners and occupiers in the scheme.

 

Neither of the two pieces of legislation contain any out and out prohibition of short-term letting. So where it is not prohibited, it is in principle allowed, subject however to the notes in 3 and 4 below.

Note further that in terms of the Sectional Title Schemes Management Act, the body of owners in sectional title schemes are allowed to make their own rules or alter and amend existing rules (which, since October 2016, must be approved by the office of the Community Schemes Ombud before it is valid and binding on owners in the scheme). It is therefore possible for a scheme to decide that it wants to limit or prohibit the practice, by putting it to vote at a meeting of owners.

The Act provides that to pass amend or change a conduct rule, a special resolution is required, meaning that 75% in value and number of those at a validly constituted meeting, must vote in favour.

  1. If the community scheme is an HOA, then the position is slightly different due to the different underlying legal structure of such schemes. (For purposes of this article it is not appropriate to delve into the details of the differences between sectional title schemes and HOAs.)  In an HOA, the management and administration of the scheme is the hands of an association or non-profit company which will appoint a board of directors or trustees to attend to the scheme’s daily management.

 

These schemes will always have conduct and management rules which can address issues such as short term letting.  Whether or not such a rule is already in existence, owners as members of the association will be able to make or amend the rules by passing a resolution at an owners meeting. The voting procedure and percentage votes required will be prescribed in the development’s governance documents.

With or without a rule, remember:

  1. In both an HOA and sectional title scheme, should it happen that it is a tenant who is involved in the short term letting, it is necessary in addition to consider the provisions of the tenant’s lease agreement. Often such an agreement includes a provision prohibiting subletting. So even if it is not prohibited in terms of the rules or governance documentation of a sectional title scheme or HOA, if a lease agreement prohibits subletting, a tenant may not rent out the premises as he pleases.
  2. A further overriding consideration is the principles of neighbour law, which branch of law underscores the following balancing act: a property owner is entitled to enjoy, use, convert, alter, destroy or sell his property in any way that he pleases within the limits of state and local authority regulations, provided he does not interfere with the legal rights of a neighbours to the same enjoyment of their property.

 

A dispute between neighbours invariably involves, amongst other things, the question whether there has been an abuse of a right and the facts should be examined to determine whether the neighbour whose conduct is being complained of, acted reasonably or not. In the context of continuous short term letting  – which may go hand in hand with increased activity and use of shared facilities and amenities as well as noise –  the question that must be asked is whether the complaint is objectively reasonable. In other words, is it fair to require the complainant to tolerate the intrusion?  The answer will depend on scheme to scheme: what is reasonable in a block of flats where students reside may not be reasonable in a quiet golf estate.

Remember SARS

Many people in South Africa are making an extra income via the AirBnB and other online platforms.

It is, however, important to remember that SARS regards income earned in this way as taxable income and it must therefore be included as trading income in the host’s annual tax return (after making provision for allowable deductions). 

It is becoming harder to avoid declaring this income, as many appear to wish to do, as the AirBnB umbrella organisation is also legally obliged to provide details to local tax authorities of the earnings of all AirBnB hosts. So if you are an AirBnB host, ensure that you keep sufficient records to prove that you have declared all income received, and to substantiate all claims in respect of expenditure.

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For assistance in management or administration of your residential scheme, contact Martin Sheard for assistance at MartinS@stbb.co.za or on www.stbb.co.za.

www.stbb.co.za

021 673 4700

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