In this age of Airbnb and Homestay – it is increasingly common to see residential units in condominiums being rented out for short-term stays. But this raises an important legal question: Can a condominium management prohibit parcel owners from renting out their units for such purposes?
The Court of Appeal (COA) recently clarified this issue in Wawasan Raya (M) Sdn Bhd & Anor v Marc Service Residence Management Corporation.
In this case, the COA was asked to decide:-
“Can a Management Corporation (MC) prohibit short-term rentals (such as Airbnb or homestay) in a residential strata development?“
The High Court’s Decision
The Plaintiff, is the MC of a development known as MARC Service Residence (MARC).
In the High Court, the Plaintiff sought, among others, a permanent injunction to restrain the Defendants from “advertising, contracting for booking and/or allowing dealing” their parcels for STR.
After trial, the High Court ruled in favour of the Plaintiff and ordered that all residential parcels in MARC were prohibited from being used for STR and a permanent injunction was granted to restrain the Defendants from using the parcels for STRs.
An appeal was then filed by two Defendants to the Court of Appeal against the High Court’s decision.
The Court of Appeal’s Decision
The COA allowed the appeal and overturned the High Court’s decision. In its’ judgment, the COA made the following findings:
1. No Express Prohibition of STR in the Law
The COA held that neither the Strata Management Act 2013 (SMA) nor the Strata Management (Maintenance and Management) Regulations 2015 (SMR) explicitly or implicitly prohibit STRs .
Notably, the SMA and SMR does not contain any definition of STR.
In this regard, the COA applied the principle in YK Fung Securities Sdn Bhd v James Capel Ltd which held that:-
“W𝒉𝒂𝒕 𝒕𝒉𝒆 𝒍𝒂𝒘 𝒅𝒐𝒆𝒔 𝒏𝒐𝒕 𝒔𝒑𝒆𝒄𝒊𝒇𝒊𝒄𝒂𝒍𝒍𝒚 𝒑𝒓𝒐𝒉𝒊𝒃𝒊𝒕, 𝒊𝒕 𝒑𝒆𝒓𝒎𝒊𝒕𝒔”
Therefore, in the absence of specific legal prohibition, STRs are permitted.
2. No Statutory Power for MCs to Regulate Usage or Occupation of Parcels
The COA clarified that the SMA does not empower MCs or JMBs to regulate how owners use or occupy their own parcels. This includes the power to impose a blanket ban on STRs.
3. Existing Special Resolution Must Be Respected
In this case, a special resolution had previously been passed at the MC’s Annual General Meeting allowing STR in accordance with the Commissioner of Buildings’ (COB) guidelines.
This special resolution was valid and binding. Therefore, the MC cannot unilaterally overwrite it.
Conclusion
For parcel owners, this is a positive development. STRs are permissible as long as they are not restricted by the by-laws or house rules. The MC or JMB cannot prohibit STRs at their own accord.
For Management Corporations (MC) or Joint Management Bodies (JMB), this case is one of caution. If the community wishes to restrict STRs, it must follow proper legal procedures — typically through a special resolution to amend the by-laws with two-thirds approval from the parcel owners at a general meeting. MCs and JMBs should not prohibit STRs unilaterally if the by-laws or house rules do not state so.
DISCLAIMER
This article is for informational and educational purposes only and should not be considered legal advice. For personalized guidance and advice, please consult a qualified lawyer.
Tristan & Partners 