Short-term holiday letting
The NSW Government recently announced changes in how short-term holiday letting is to be regulated in New South Wales.
The proposed changes are seeking to regulate some of the potential issues associated with holiday letting such as excessive noise levels, disruptive guests and effects on shared neighbourhood amenities.
The changes include:
- Amendments to the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 to enable short-term holiday letting to be classified as exempt development when a host is present;
- Amendments to the Strata Schemes Management Act 2015 to enable an owner’s corporation to pass a by-law restricting short-term holiday letting if the host does not live in the unit they are letting out;
- A new mandatory code of conduct for accommodation providers, hosts and guests to adhere to; and
- A new dispute resolution process involving Fair Trading NSW to resolve complaints.
What is short-term holiday letting?
Although no standard definition currently exists, short-term holiday letting is normally considered to be letting of a residential house or unit for less than 90 days in duration. Short term holiday letting does not include accommodation provided by a hotel, motel, hostel or nursing home.
A host that lets a residential room or house to a guest for a period of three months or more has to comply with the requirements and obligations under the Residential Tenancies Act 2010 (NSW).
What will be the effect of the proposed changes?
Amendments to the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 will allow short-term holiday letting to be classified as exempt development where a host is present. This means that where a host is present, it will be possible to let a room for 365 days a year. However, there may be additional conditions required to be met if a residence is located on bushfire prone land.
Time limitations where a host is not present
In the Greater Sydney area, where a host is not present, the host will be limited to letting out a property for the purpose of short term holiday letting for a total of 180 days per year.
Outside of the Greater Sydney area, it may be possible to let out a property for 365 days without being present, but this will be subject to a local Council’s policy or rules. However, a Council will not be able to limit the number of days to less than 180 days in total per year.
Strata by-laws may prevent short term-letting where a host is not present
Amendments to the Strata Schemes Management Act 2015 will enable an owners corporation in New South Wales to adopt a by-law that prevents short-term letting if a host does not live in their block. The owners corporation will require a 75 per cent majority of those entitled to vote for the by-law to be made.
Complaints and dispute resolution
A new mandatory code of conduct, will require compliance from accommodation ‘platforms’ such as Airbnb and HomeAway, property agents, hosts and guests.
It is proposed that NSW Fair Trading will appoint independent and impartial adjudicators to assess complaints against the code. The complaint process is open to neighbours of short-term holiday letting premises, strata committees and owners corporations.
Under the proposed code, guests or hosts who commit two serious breaches of the code in a two-year period will be banned from all online short-term holiday letting platforms for up to five years. A serious breach includes ‘any behaviour which unreasonably interferes with a neighbour’s quiet and peaceful enjoyment of their home.’
The Code will be complemented by an online register managed by NSW Fair Trading, which will record hosts and guests who have been banned. Platforms and property agents will be required to check the register before taking on new customers. If they do not they will be in breach of the code and could be fined.
A breach of the code can result in fines of up to $1.1 million for corporations or $220,000 for individuals.
Where and when do the new regulations apply?
The new regulations will apply to all short-term holiday letting in New South Wales. They will come into effect after the NSW Government has amended and made the relevant policies and the legislative amendments are passed and assented to by Parliament.
Some Councils already have adopted controls in their Local Environmental Plans that apply to short-term holiday letting (or similar) and these will continue to apply. However, the new regulations may amend these existing controls that a Council already has in place.
For further information on these planning and environmental law updates, please contact Adam Seton on aseton@marsdens.net.au or (02) 4626 5077 and David Baird on dbaird@marsdens.net.au or (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
