Tuesday, May 17, 2022

Short-term letting in NSW will have tougher but fairer regulation from 2019

After nearly three years of extensive consultation, the NSW Parliament has passed the Government’s new framework for short-term letting.

The change reflects and supports the way people travel and use their homes in the 21st Century.

Minister for Better Regulation, Matt Kean, said the short-term holiday letting reforms bolster NSW’s sharing economy while clamping down on unruly guests.

“Our plan is a win-win. It acknowledges the huge financial contribution online booking platforms make to the NSW economy, but also takes a zero-tolerance approach to raucous guests,” Mr Kean said.

Chris Lehane, Airbnb’s Global Head of Policy, said, “Airbnb welcomes the new fair and innovative rules announced by the New South Wales Government which give home sharing the green light in NSW. They bring the rules for home sharing into the 21st century and send a clear signal that NSW embraces healthy tourism. These statewide rules strike the right balance. They protect the rights of respectful and responsible home sharers, while taking a zero tolerance stance on bad behaviour.”

Mr Kean said NSW Fair Trading and industry stakeholders were developing a new Code of Conduct to manage noise levels and disruptive behaviour.

The mandatory Code will come into force next year, and will apply to online accommodation platforms, letting agents, hosts and guests across the State.

“Under our ‘two strikes and you’re out’ policy, hosts or guests who commit two serious breaches of the Code within two years will be banned for five years, and be listed on an exclusion register,” Mr Kean said.

Amendments to the Strata Schemes Management Act are also being made so owners’ corporations can pass by-laws to ban short-term letting in their block, if the host is not present, and they get a 75 per cent majority vote.

“I’ve asked NSW Fair Trading to develop ‘what you can and can’t do’ guidelines to help owners’ corporations set rules that suit their strata schemes,” Mr Kean said.

Minister for Planning and Housing, Anthony Roberts, said new state-wide planning rules would come into force next year, detailing how many days a year properties could be let.

“It’s great to see these sensible reforms pass through Parliament, giving certainty to the industry, and to all involved,” Mr Roberts said.

Read related: NSW Government left red faced over Airbnb debacle

What is the new framework?

The new framework will include new planning laws, an industry Code of Conduct and new provisions for strata scheme by-laws.

Planning laws

Host present

A home can be used for short-term holiday letting all year round as exempt development. That is, they do not need to submit a development application to local council.

Host not present

  • Within Greater Sydney, a residence can be used for short-term holiday letting up to 180 days per year
  • Other areas of New South Wales – 365 days are allowed but Councils outside Greater Sydney will have the power to decrease the 365-day limit to no less than 180 days per year.

Short-term Letting Code of Conduct

A mandatory Code of Conduct will be introduced that will apply to anyone involved in providing or using short-term holiday letting including hosts, guests, online platforms, and letting agents.

The Code will establish the ‘2 strikes and you’re out’ policy. Hosts or guests who commit 2 serious breaches of the Code within 2 years will be banned for 5 years. Platforms and letting agents will not be permitted to offer services to anyone, or any dwelling, that is listed on the exclusion register.

A strike will include any behaviour which unreasonably interferes with a neighbour’s quiet and peaceful enjoyment of their home.

The Code will establish a complaints system, which will be available to neighbours of short-term holiday letting premises, strata committees and owners corporations.

Complaints will be assessed by independent and impartial adjudicators, approved by the Commissioner for Fair Trading. Adjudicators will be required to make decisions on evidence and after giving both complainants and respondents a chance to put forward their case.

Strikes will be recorded on an online register to ensure that guests and/or hosts cannot ‘platform shop’. Platforms and property agents will have to check the register before taking on new customers. Failure to do so may result in significant penalties of up to $1.1million for corporations and $220,000 for individuals.

NSW Fair Trading will have powers to police online platforms and letting agents. The Code, its enforcement, the compliance system and the register will be funded by industry.

Read related: Government pushes on after Airbnb debacle

What about strata schemes and short-term letting?

The Strata Schemes Management Act 2015 will be amended to include 137A. This will clarify that by-laws can prohibit short-term holiday letting, but only for lots that are not a host’s principal place of residence.

That is, if a host is genuinely sharing their home, they will still be able to use a spare room for short-term holiday letting, and will be allowed to let out their principal place of residence while they are away on holidays.

137A Short-term rental accommodation

  • A by-law made by a special resolution of an owners corporation may prohibit a lot being used for the purposes of a short-term rental accommodation arrangement if the lot is not the principal place of residence of the person who, pursuant to the arrangement, is giving another person the right to occupy the lot.
  • A by-law has no force or effect to the extent to which it purports to prevent a lot being used for the purposes of a short-term rental accommodation arrangement if the lot is the principal place of residence of the person who, pursuant to the arrangement, is giving another person the right to occupy the lot.
  • In this section, short-term rental accommodation arrangement has the same meaning as in section 54A of the Fair Trading Act 1987.

NSW Fair Trading will also develop guidelines to advise owners corporations on how they can use other existing strata laws to help deal with short-term holiday letting.

When will the new short-term letting framework start?

  • The new framework is expected to start in 2019.
  • The Code of Conduct will be developed in consultation with Government agencies, and industry and community groups during 2018.
  • The reforms will be reviewed a year after they commence.

Portions of this article may be subject to copyright.

© State of New South Wales (NSW Fair Trading). For current information go to fairtrading.nsw.gov.au

Strataville Editorial
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