Hobart City Council has suffered a legal setback in its so-called “war on short-stay housing”, this time over an apartment overlooking the Derwent River.

The Tasmanian Supreme Court today ruled against a council attempt to block the conversion of a third apartment at the Sandy Bay Road development into short-stay housing.

The decision confirms a previous decision by the Tasmanian Civil and Administrative Tribunal (TASCAT) last year.

It potentially sets a precedent that could hamper the council’s efforts to control the amount of short-stay housing in the city, which last year included doubling rates for owners who converted entire properties.

The council first opposed the application in 2023, citing concerns about the potential impact on the “living function” of the strata scheme and the “undue loss of residential amenities” for remaining long-term residents.

However, TASCAT disagreed, believing that designing the apartments with private carports, ground level entrances and solid brick walls between them would mitigate any negative impact.

The council appealed TASCAT’s decision to the Supreme Court, arguing that any deviation from the predominantly residential focus would automatically result in an unreasonable loss of amenity.

However, the Supreme Court rejected this argument, saying it was wrongly assumed that any change from residential use would negatively impact residents.

Sources indicate that the appeal was intended as a “test case” to bring clarity to the council’s process when assessing applications for visitor accommodation under tiered schemes.

Pulse understands the council views the Supreme Court’s interpretation as a decision that would make it “very difficult” to deny future visitors accommodation within multiple strata of properties.

Councilor Louise Elliott has been a vocal critic of the council’s approach, questioning the legal costs and calling the situation a “war on short-stay housing”.

“It is encouraging that our judicial system is able to address these issues fairly and objectively. For short stays, people still eat, sleep and shower,” she said.

“I shudder to think how much this has cost taxpayers, not only in the costs of preparing for the battle in TASCAT and in the Supreme Court, but in any costs that the council will have to pay the defendant.”

Elliott said she hoped the council would now shift its focus to encouraging more housing supply.

“We need to stop trying to force police owners to rent out their home for 365 days rather than five, and instead focus on how we can build more homes,” she said.

According to 2023 Real Estate Institute of Australia data, 6.6 out of every 100 private rental homes in Hobart are entire units converted into short-stay accommodation.

The City of Hobart has been contacted for comment.