The NSW government has taken the view that short-term rental accommodation (STRA) can result in economic benefits, such benefits must be balanced against the associated impacts to neighbouring owners or communities caused by the inconsiderate or anti-social behaviour of guests under STRA arrangements.
The proposed changes to STRA have been outlined in the Short-Term Rental Accommodation: A New Regulatory Framework Discussion Paper (August 2019). Submissions can be made online until close of business on 11 September 2019 via https://www.planningportal.nsw.gov.au/exhibition/have-your-say-short-term-rental-accommodation-reforms or in writing to the Department of Planning, Industry and Environment.
The call for feedback comes approximately a year after the Fair-Trading Amendment (Short-term Rental Accommodation) Act 2018 was passed on 14 August 2018. The Act will add section 137A into the Strata Schemes Management Act 2015 (SSMA) and provides that a by-law made by an owners corporation may prohibit a lot being used for the purposes of a STRA arrangement, if the lot is not the principal place of residence of the person who is giving another person the right to occupy the lot.
The Discussion Paper suggests two options for implementing the regulatory framework. The first option is to allow for a staged implementation. With the planning instruments, the Code, the Amendment Regulation and amendments to strata legislation potentially commencing at the end of this year, while the Register would commence next year. Alternatively, all instruments referred to could commence simultaneously next year. The proposed planning framework for STRA aims to provide consistency and certainty in contrast to the differing regulations that currently apply in various local government areas across New South Wales.
In relation to the planning instruments, the State Environmental Planning Policy (Short-term Rental Accommodation) 2019 introduces exempt and complying development pathways for STRA. For example, if a host is present, they can allow their lot to be used for STRA all year round. However, if they are not present and the land is not bush fire prone or a flood control lot, then the host can only allow their lot to be used for STRA for up to 180 days in a year in greater Sydney, or up to 365 days in other areas of NSW (unless the local Council decides otherwise). A number of regional Councils (Ballina Shire, Lake Macquarie, Clarence Valley Shire and Muswellbrook Shire) have nominated a maximum period of 180 days as the number of days a lot can be available for STRA per year. In these circumstances, STRA would be considered as an exempt development which would circumvent the need to obtain Council approval.
The proposed Environmental Planning and Assessment (Short-term Rental Accommodation) Regulation 2019, along with the proposed Short-term Rental Accommodation Fire Safety Standard, introduces new safety standards for dwellings used for STRA. Such as placing a limit on the number of persons per bedroom/per dwelling, and a requirement to install smoke alarms in each bedroom.
The Code proposes to give enforcement functions and powers to NSW Fair Trading, which will also be responsible for managing the exclusion register (which lists those who have received two strikes within a two-year period). It also sets out the rights and obligations for participants in STRA. For example, booking platforms must not list an excluded host’s premises, letting agents must not take a booking for an excluded guest or offer an excluded host’s premises for STRA, and hosts must hold public liability insurance during any occupancy period.
Note that in circumstances where the host is not present, bookings of 21 or more consecutive days will not contribute to any day thresholds that apply. Although, safety standards will still need to be met. The reasoning seems to be that longer bookings tend to have fewer amenity impacts and are a key support to mobile workforce.
A key provision in the Fair-Trading Amendment (Short-term Rental Accommodation) Act 2018 includes a definition of “short term rental accommodation arrangement” as occupation for less than 3 months or as defined by the regulations. Further, prescribed maximum penalties for a breach of the Code are also outlined within the Act (e.g. 200 penalty units for individuals and 1,000 penalty units for corporations). It should also be noted that the Code will prevail to the extent of any inconsistency with a development consent.
The key case on STRA in relation to strata schemes is Estens v Owners Corporation SP11825  NSWCATCD 63. In this case the NSW Civil and Administrative Tribunal held that a by-law prohibiting short term accommodation was invalid. As the by-law breached section 139(2) of the Strata Schemes Management Act, in that it is a lease or a licence and would prevent the devolution of a lot. Once new legislation is introduced, short term letting by-laws will no longer be held invalid, provided they do not offend other provisions in legislation including the SSMA.
To date there have been mixed responses from various stakeholders in relation to short term rental accommodation in strata schemes, therefore it will be interesting to see what feedback the state government receives and how such feedback will influence the future of STRA.