Building managements can stop short-term rentals, rules apex court | Malaysian Institute of Estate Agents

Building managements can stop short-term rentals, rules apex court

2020-10-07

PUTRAJAYA: The Federal Court today ruled that management corporation bodies of residential strata buildings, through their own house rules, can prohibit short-term rental of residential units in their buildings.

A three-member bench, chaired by Chief Justice Tengku Maimun Tuan Mat, said even if the state authority permitted the use of the land for commercial purposes, such use was still subject to other laws in force such as the Strata Management Act 2013.

“Hence, the passing of the house rules is not unlawful,” she said in affirming the decisions of the High Court and the Court of Appeal in dismissing an appeal by four appellants.

Sitting with Tengku Maimun were Rohana Yusof and Mohd Zawawi Salleh.

In this case, Verve Suites Mont Kiara Management Corporations passed a by-law to stop short-term rentals because residents complained that guests in such arrangements were a nuisance and a breach of its by-laws.

This resulted in Verve Suites filing a suit in the High Court in 2018 against Innab Salil, Innab Trade Sdn Bhd, Ng Gaik Kian and Tan Why Chuan.

Earlier, the Commissioner of Building Kuala Lumpur had issued a circular instructing all joint management bodies to curb the prevailing use of buildings in and around the city for short-term rental.

Following the circular, Verve Suites Mont Kiara held an extraordinary general meeting, proposing to enact “House Rule No. 3”, which essentially prohibited the use of apartments for short-term rentals.

It said any stay for which a booking was made through services, phone apps and websites such as Airbnb, booking.com, agoda.com and klsuites.com would fall under the prohibited short-term rentals.

It said any unit owner who infringed the rule should also pay a fine.

House Rule 3 was passed with an overwhelming majority and the residents were duly notified.

Verve Suites, represented by lawyer Shahbudin Syed Alaudin, was awarded RM50,000 in costs. Counsel Manpal Singh Sachdev appeared for the four defendants.

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