serviced apartments in melbourne

Serviced Apartments


The unrestricted growth of Serviced Apartments is causing considerable problems in residential apartment buildings. Currently there are no controls or restrictions over the implementation of Serviced Apartments unless stated in the Owners Corporation [OC] ground rules for a new building, which isn’t often.  Developers set the ground rules.

In the many cases where there are no rules prohibiting short-term stay in the original OC rules, the mixed use has resulted in incompatible usage of the buildings.

This has eventuated when because of no restrictions some apartment owners, as either an investment or fill-in usage, have proceeded to assign their apartments to serviced apartment operators to rent out. There are cases of Agents refusing to let out the apartment unless the owner signs them over to an operator.  The operators treat the apartments as hotel rooms and let them on a short term basis to virtually anybody, frequently including young people coming for the weekend to party. The resulting behaviour is largely not compatible with that of owner-occupiers and long-term tenants. The operators say people book on line and they cannot discriminate.

Not only are there behavioural problems but also property damage and excessive wear and tear. Behavioural problems include smoking, drinking in common areas, overcrowding of lifts, loud conversation and music, yelling on balconies, and  dropping objects from balconies.

People buying apartments to live in are usually unaware beforehand of the existence of serviced apartments. Serviced apartments can crop up on any floor at any time if owners decide to convert to serviced apartments. Serviced apartment operators also employ cleaning firms whose personnel use passenger lifts with their trollies because the developers have not installed goods lifts. Residential apartment buildings are not built to hotel regulation standards as specified under the Building Code.  This is being investigated as an opportunity for imposing some control over serviced apartment proliferation

Security and OHS issues not fully adhered to are a cause of great concern to OC Management and Insurance Companies incurring increased costs to all owners.

Many OC Chairs believe that legislation should be introduced to provide for the measures such as the following:-

  1. Prohibit serviced apartments from new buildings classified to house owner/occupiers and long-term tenants.

  2. Require serviced apartments to be available only in buildings built purposely for serviced apartments, to hotel regulation standards, with full declaration at sell stage.

  3. In the case of a new owner/occupier or long-term tenant building, that the originating OC rules be required to include a provision excluding short term serviced apartments and limiting lease periods to a minimum of three months.

  4. In the case of existing mixed use buildings, that the number of short serviced apartments be limited to 25% of the total number of apartments.

  5. In the case of existing mixed use buildings, that the Owners Corporation [OC] be empowered to levy owners of serviced apartments for increased wear and tear on the building and breaches of OC rules.

  6. Require Owners Corporations to declare all serviced apartments to Council authorities for full commercial rates

It is realised that this will be ‘breaking new ground’ in Victoria [ and interstate ] but believe the need has become significant following the surge in apartment living and the associated increase in serviced apartments. It appears that amendments to the Building Regulations, which come under the responsibility of the Planning Minister, may provide the vehicle for the introduction of some such controls.

It is interesting to note that serviced apartments have been banned in New York with effect from May 2011 and have earlier been banned in Paris.  It is time something was done in Australia.  A number of OC Chairs are working together to pressure for such changes. Councils may assist.

Roger Gardner

OC Committee Convenor