With the influx of apps such as Airbnb and HomeAway, becoming a host for a short-term holiday has never been easier. Short-term holiday letting has several advantages over traditional hotels:

  • cheaper rates;
  • better home amenities such as a washer and dryer; and
  • a more personalised touch from the hosts.

However, both hosts and guests should be aware of the industry regulations. The NSW Government recently released an Options Paper on short-term holiday letting, which may lead to changes to the law. This article discusses the current state of the industry in NSW and the implications of the Options Paper.

Short-term Holiday Letting Defined

A short-term holiday in a residential home is a stay that’s under three months. In contrast, a rental of over three months will fall under the scope of the Residential Tenancies Act 2010 (NSW). This imposes strict restrictions on both landlords and tenants.

To meet the legal definition, short-term holiday letting must take place in a residential or holiday home. The definition does not include stays in hotels, motels, hostels and nursing homes.

Short-term holiday letting will involve the guest renting either:

  • one or more rooms with the host present;
  • a whole house or unit with the host away;
  • a holiday dwelling with the host away; or
  • a home solely reserved for short-term renting.

The Current Law in NSW

Different local councils have different laws in their environmental plans for short-term holiday letting. There is no state-wide standard law. Councils either:

  • allow owners to let their homes without any oversight;
  • set a maximum number of days on short-term stays; or
  • prohibit short-term holiday letting entirely.

For example, as of 2017, the City of Sydney Council considers short-term rental accommodation to be tourist and visitor accommodation. The Council bans this in most residential areas.

In strata (apartment) complexes, residents rely on neighbours’ cooperation in order to rent out their homes. They will generally stop if neighbours complain. The owners corporation may also set further specific by-laws for the whole complex. For example, these by-laws may prohibit subdivision of rooms or set a maximum occupancy per unit.

Possible Reforms

The Options Paper considered the current state of short-term holiday letting regulation and the potential policy reforms. It looked at five factors. 

 

Factor Explanation of Issue
Noise A very frequently raised amenity issue, due to the potential for guests coming and going at odd hours.
Party houses The paper noted that in Queensland, legislation allows local councils to declare a ‘party house’ to require approval prior to allowing any tenants
Waste Waste generation may be higher for holiday tenants than long-term residents as perishable items may be disposed of at the end of their stay
Traffic and parking The higher proportion of adults occupying holiday rentals may cause issues with limited parking space
Hazards and evacuation Tenants may not be familiar with procedures for any hazards that require evacuation of the building

 

Furthermore, these issues have bigger impacts on strata complexes due to the proximity of neighbours and reliance on shared facilities. For example, excess noise will affect more residents and lifts may have to serve more people. 

The Options Paper then considered four ways of managing these issues:

  1. Industry self-regulation
  2. Amendments to strata laws
  3. Planning regulations
  4. Host registration

Industry Self-regulation

The Options Paper advocated that the industry could take greater responsibility and self-regulate. In most cases, hosts operate without incident or complaints. This suggests that government intervention is unnecessary. However, effective self-regulation will require a unified industry body and the ability to enforce compliance with codes of conduct.

The Options Paper also acknowledged the existence of the Holiday Rental Code of Conduct. However, the Paper criticised the Code for being too narrow, with confusion surrounding its legal status. The Paper recommended that a complaint mechanism should be inserted into the Code. It also recommended further monitoring and reporting by the industry.

Amendments to Strata Laws

The Options Paper considered whether owners corporations should be given greater ability to manage the impacts associated with holiday letting. For example, owners corporations could adopt model by-laws to better manage the impacts.

The Paper also considered that NSW strata laws could be amended. For example, to make the owner and the occupants jointly and severally liable for the conduct of the occupants. Amendments to laws could also make it easier to enforce by-laws. 

Planning Regulations

The Options Paper highlighted that there was still no consistent definition of short-term holiday letting across NSW.  To address this problem, it recommended that local council environmental plans be more consistent in how they:

  • define short-term holiday letting;
  • address the allowed length of stay; and
  • limit the number of rooms that can be let. 

Host registration

Finally, the last option suggested was to require hosts to register with a government agency. The could require hosts to adhere to a code of conduct in order to maintain their registration. 

Key Takeaways

Hosts looking to let out their homes or businesses looking to run a service in the industry should be aware of any local council regulations and environmental plans that may apply. The NSW Government is also looking for a better way to regulate short-term holiday letting. While more consistent regulations will benefit businesses in the industry, the Government is also looking to implement further restrictions, particularly on hosts. 

If you’re a short-term holiday host or industry organisation and need advice on your legal obligations, call LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

Lianne Tan
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