Two investors bought properties in a sectional title scheme, specifically for purposes of generating an income from short-term letting. When the properties were purchased there was no prohibition on short-term letting. However, at an annual general meeting held during 2017, a special resolution was adopted by members of the sectional title scheme in terms of which the scheme’s conduct rules were amended to restrict members from letting out their respective units on a short-term basis (less than 3 months).
The two investors lodged a dispute with the Community Schemes Ombud Service and inter alia argued that this amendment to the scheme’s conduct rules, infringed upon their constitutionally protected rights. What was the outcome?...
Two investors bought properties in a sectional title scheme, specifically for purposes of generating an income from short-term letting. When the properties were purchased there was no prohibition on short-term letting.
However, at an annual general meeting held during 2017, a special resolution was adopted by members of the sectional title scheme in terms of which the scheme’s conduct rules were amended to restrict members from letting out their respective units on a short-term basis (less than 3 months).
The two investors lodged a dispute with the Community Schemes Ombud Service and inter alia argued that this amendment to the scheme’s conduct rules, infringed upon their constitutionally protected rights.
In an order handed down on 10 August 2018, the adjudicator stated that “the important question is whether a ban on short-term letting falls within the ambit of a Conduct Rule amendment”. In answering the aforementioned question, the adjudicator explained that, “a ban on short-term letting is an amendment on how a property is used and this has an effect on constitutional rights and property rights of an owner. This is a matter that should be dealt with at town planning and/or zoning use level”.
Accordingly, the adjudicator arrived at the conclusion that “a ban on short-term letting by way of the amendment of the Conduct Rules, instead of by way of Management Rules, was improper”, and therefore the first and second claimants were permitted to continue short-term letting their respective units.
In obiter the adjudicator explained that short-term letting cases remain a contentious point which had led to much discussion between adjudicators at the Community Schemes Ombud Service and that it would be beneficial for the High Court to deliberate upon a short-term letting matter in order to provide clarity on this contentious point.
Contact Kaplan Blumberg for assistance with short-term letting disputes.
