THE UPDATE SCOOP (#5/2025)
“Legality of STR / Airbnb” | Property Law
By TAY & HELEN WONG – 19 June, 2025
The legality of short term rentals (STR) (such as Airbnb, holiday let) was in issue in the Court of Appeal case of Wawasan Raya (M) Sdn Bhd and another v MARC Service Residence Management Corporation [2025]. P as the management corporation (MC) of “MARC Service Residence” (the Apartment) sought for an injunction to prohibit 203 parcel owners in the Apartment from “managing, maintaining and/or operating” their parcels for STR and some other consequential reliefs.
It was held that there was nothing in the Strata Management Act 2013 (SMA) or Strata Management (Maintenance and Management) Regulations 2015 (SMR) either expressly or by implication which prohibited STR. Such term did not even exist in the SMA and SMR. Having perused s.59(1) and (2) of the SMA, there was also nothing which conferred any “duty” and “power” on MCs including P to regulate the use and occupation of a “parcel”, let alone prohibit STR with regards to the parcels. There was also nothing in the House Rules (HR) which allowed P to prohibit STR in respect of the use of the parcels. Rule 2.1(a) of the HR stipulated that “The Units are constructed for private residential dwellings and shall be sued exclusively for private residential purpose only” but it did not confer any right or power on P to prohibit STR.
Evidence had been adduced by the 1st and 203rd defendants that P’s 6th AGM had passed special resolution no.3 which stated that:-
“1. The Unit Owner and lessee shall comply to [sic] the guideline (Prosedur Operasi Standard Aktiviti Penginapan Sementara Jangkamasa Pendek Kepada Pemaju/JMB/MC di Wilayah Persekutuan) issued by [COB KL] in line with [SMA].
2. To impose a penalty of RM200.00 for each non-compliance to [sic][HR]….”
(rule 2.1(e) HR)
The sale and purchase agreements (SPAs) and deeds of mutual covenants (DMCs) did not contain any prohibition of STR too. In any event, upon the enforcement of the HR, the SPAs and DMCs shall cease to have effect as provided by s.148 of the SMA.
Rule 2.1(e) HR which expressly allowed the use of the parcels in accordance with the guidelines issued by the COB with regard to “Aktiviti Penginapan Sementara Jangkamasa Pendek” was held to prevail over rule 2.1(a) HR because the former is the later provision passed by not less than three-quarters of the valid votes at P’s 6th AGM, lex posterior derogant non priori (the subsequent provision shall prevail over the earlier provision).
P’s suit was dismissed with costs with damages to be assessed for losses suffered by the 1st and 203rd defendants due to the interlocutory injunctions.
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Tags: [strata management] [short term rental] [Airbnb] [management corporation] [house rules]