Homeowner associations gain legal power to regulate disruptive Airbnb rentals
Short-term letting is commercial in nature and may be disruptive in residential schemes, justifying tighter regulation.
Image: File
Homeowner associations and bodies corporate now have stronger legal backing to regulate disruptive Airbnb-style accommodation after a significant court victory, legal experts say.
Although this case is on appeal, the win comes as residential complexes nationwide grapple with complaints from permanent residents about noise, overcrowding and security risks caused by short-term rental guests.
Johlene Wasserman, director of Community Schemes and Compliance at Sandton-based law firm VDM Incorporated, said the recent Gauteng High Court judgment in the matter of Blyde River Walk Estate HOA and Others v Community Schemes Ombud Service (CSOS) and Others will strengthen the position of homeowner associations wanting to restrict holiday rentals.
The legal battle erupted at Blyde River Walk Estate in Pretoria after some owners used their units for short-term holiday accommodation, sparking complaints from permanent residents about noise, overcrowding and security risks.
Alan Levy Attorneys explained that the applicants were owners who had bought apartments as investment opportunities to lease out to guests over short periods, similar to Airbnb.
On October 14, 2021, owners held a general meeting where they passed a resolution to amend conduct rules, essentially banning short-term letting. This prompted investment owners to lodge a complaint with the CSOS.
The court ruled that stricter rules could apply pending an appeal on the broader issue of regulations outright banning apartments for Airbnb-type purposes.
"The High Court's ruling affirms [the owners'] right to regulate disruptive holiday rentals while the broader dispute continues," Wasserman said.
"The court has delivered a clear message that short-term lettings are a commercial activity and that homeowner associations and bodies corporate have the power to regulate them – provided the rules are properly adopted and approved."
How the dispute unfolded
In 2020, the estate's homeowner association and developer had tightened conduct rules to restrict short-term letting. While CSOS initially approved the new rules, an adjudicator later set them aside and reinstated more lenient 2018 rules. The homeowner association then appealed to the High Court.
The judge provided significant relief by partly suspending the adjudicator's order and allowing the stricter 2020 rules to remain in force until the current appeal is finalised.
The court also dismissed allegations by short-term letting owners and awarded costs against them due to "unnecessary opposition and procedural non-compliance".
"In practical terms, this means short-term letting is still permitted at the Blyde Estate, but only under the more restrictive 2020 rules, at least until the appeal is concluded," Wasserman explained.
She said the key legal principles established were that short-term letting is commercial in nature and may be disruptive in residential schemes, justifying tighter regulation.
"For homeowner associations, bodies corporate, and community schemes across South Africa, the judgement strengthens the principle that schemes are legally entitled to regulate disruptive commercial activity and preserve the residential character of their developments."
The investors' case
Alan Levy Attorneys said the respondents argued they needed more resources to accommodate short-term guests, who were allegedly disruptive, failed to follow complex rules and displayed poor behaviour.
The homeowner association's main argument was that they wouldn't have invested in the first place under stricter rules, and that the meeting to develop those rules was invalid.
The CSOS adjudicator agreed, finding that the general meeting was not validly conducted and the resolution to amend conduct rules was void. Only 53% of owners voted in favour of the resolution, not the required 75% needed.
Additionally, the respondents could not prove that only short-term letting guests were responsible for bad behaviour; there were indications that permanent residents may have also contributed to the problems.
Lessons for complexes
Alan Levy Attorneys highlighted important lessons for managing agents and scheme executives, explaining that "if a right has been previously bestowed on an owner, the right to operate short-term letting, that right cannot be arbitrarily revoked."
The law firm advised that schemes wanting to ban or more strictly govern short-term letting should raise this with owners at meetings over time, record the discussions and allow for feedback periods.
"The process should not be one that is cast upon the owners by surprise. Again, there must be proper justification for revoking or restricting the rights of owners."
The adjudicator also criticised how the owners' meetings were conducted. Attendees were not asked to register, were not told the meeting was to vote out short-term letting, were not allowed to speak or ask questions, and certain owners were not even invited.
Developer power imbalance
The case also highlighted issues around developer control. Alan Levy Attorneys explained that while each owner normally gets one vote per unit, during the development period the developer had one vote for every unit plus an additional 100 votes.
The adjudicator noted this meant "only the developer can really take decisions in the homeowner association, which decisions have an impact on how persons who purchased their properties from the developer live their lives."
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