Short-term rentals. What do your rules actually say?

An owner wants to offer short-term rentals. The management corporation (MC) wants to stop them. Before issuing a demand or going to court, check the rules the development has adopted and what the owners decided at their meetings.

What happened at MARC Service Residence?

In Wawasan Raya (M) Sdn Bhd & Anor v Marc Service Residence Management Corporation [2025] 4 MLRA 1, the Court of Appeal overturned the High Court’s decision against the two defendants who contested the claim on 9 April 2025.

The court found that the house rules did not support the ban the MC sought to enforce. It also found that a special resolution had been passed allowing use that complied with the Commissioner of Buildings’ (COB) short-term accommodation guidelines. AGM minutes, video recordings and evidence from people who attended the meeting were considered.

The MC’s claim against those defendants was dismissed. The court also ordered an assessment of the losses caused by the injunctions—the court orders that had restricted their activities. The amount payable had yet to be assessed.

Why the rules and the earlier Federal Court decision matter

This decision should not be read as saying that MCs can never prohibit short-term rentals.

In Innab Salil & Ors v Verve Suites Mont’ Kiara Management Corporation [2020] 6 MLRA 244, the Federal Court upheld a house rule prohibiting the short-term rental activities in that case. The land’s commercial-use status did not prevent the MC from making additional rules under section 70 of the Strata Management Act 2013.

The court also considered what the occupation arrangements actually allowed. It found that they were licences—permissions to occupy—rather than tenancies protected by section 70(5). The short length of a stay does not, by itself, decide that distinction.

The Federal Court is the higher court. In our view, the wider comments about an MC’s powers in Wawasan Raya must be read subject to its ruling in Innab Salil. For management, the practical question remains whether the particular rule and meeting decisions support the action it proposes to take.

What should management and owners prepare?

1. Keep the current rules and meeting records together.

Collect the by-laws, amendments, meeting notices, proposed resolutions, voting records and minutes. Note when each rule took effect. A new committee should be able to identify the current rules from the documents, without having to rely on what a previous committee member remembers.

Owners and operators should also obtain these documents before planning a short-term accommodation business. Bring the relevant agreement and the rules for review so that the proposed use can be assessed properly.

2. Record what actually happened.

For any complaint, record the date, the unit involved, what was observed and who can confirm it. Keep evidence of any particular nuisance or damage. Avoid filling gaps with assumptions about how a unit is being used.

3. Check the proposed action before proceeding.

Put the relevant rule, meeting decision and evidence together for review. If new rules are proposed, explain their purpose and scope clearly to owners before the meeting.

If court proceedings are being considered, discuss the likely cost and the possible consequences of seeking an order restricting the other party’s activities while the case is pending. Those consequences should form part of the decision about how to proceed.

For MCs, property managers and owners, preparation starts with knowing what was adopted and keeping the records that show it. If a short-term rental dispute is developing, reviewing those documents can help clarify the next steps.

Strata Management Act 2013

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