Changes affecting short-term holiday letting in NSW

Commercial Directions

An Act has successfully passed NSW Parliament which will ensure that local communities continue to gain economic benefits of short-term holiday letting while protecting neighbours from antisocial behaviour.

The Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW) (the Amending Act) will amend the Fair Trading Act 1987 (NSW) (the FT Act) and the Strata Schemes Management Act 2015 (NSW) (the SSM Act) when it comes into effect, which is expected later this year, following the enactment of the code of conduct. These reforms will be reviewed a year after they commence.

Key amendments to the FT Act

New definitions will give clarity to short-term rental accommodation arrangements and its participants, including:

  • Code of conduct will mean the code of conduct declared under the new section 54B of the Amending Act
  • Residential premises will include part of a residential premises
  • Short-term rental accommodation arrangement will mean a commercial arrangement for the right to occupy a residential premises (or part thereof) for no more than three months at any one time
  • Short-term rental accommodation industry participant will be a person who provides other people with the right to enter into short-term rental accommodation arrangements, or a person who is given that right. This includes online booking services providers, leasing agents, owners of residential premises (i.e. hosts), occupiers of residential premises (i.e. guests) and anyone else the regulations may prescribe.

The amendments will enable the regulations to declare a code of conduct in various matters, for example:

  • establishing rights and obligations for short-term rental accommodation industry participants
  • providing administration to the code
  • enabling registration of a residential premises for the purpose of short-term rental accommodation arrangements
  • provision of warnings to participants who contravene the code, and
  • establishing an exclusion register with details of participants who have not complied with the code.

The code of conduct has not yet been drafted, however, NSW Fair Trading proposes that the code will also:

  • implement an online register
  • establish a complaints system available to neighbours of short-term holiday letting premises, strata committees and owners’ corporations
  • establish a two-strike policy so that if hosts or guests commit two serious breaches of the code within two years then those hosts or guests will be banned for five years (i.e. for behaviour which unreasonably interferes with the neighbour’s quiet and enjoyment of their home)
  • permit policing of online platforms and letting agents, and
  • prohibit online platforms and letting agents to offer services to anyone or any dwelling that is listed on the exclusion register.

Criminal and civil penalties will be introduced. If an offence provision in the code is contravened, the maximum penalty for a corporation will be 1,000 penalty units (equivalent to $110,000) and 200 penalty units in any other case (equivalent to $22,000).

The amendments will make it clear that the provisions of the code will prevail to the extent of any inconsistency with a condition of development consent imposed under the Environmental Planning and Assessment Act 1979 (NSW). However, the code will not authorise the use of residential premises for the purposes of short-term rental accommodation if that use is prohibited by an environmental planning instrument.

Key amendments to the SSM Act

If a lot is not the principal place of residence of the person giving another person the right to occupy it, a by-law may be made (with a 75% majority vote of the owners’ corporation) prohibiting it being used for short-term rental accommodation.

A by-law prohibiting a lot from being used for short-term rental accommodation will have no force or effect if the lot is the principal place of residence of the person who is giving another person the right to occupy it.

 Proposed planning laws

The NSW Government has also announced its intention to introduce further planning laws to implement a 180 day annual cap on short-term lettings in Sydney when hosts are not present. Outside of Sydney, there will be no set cap; however, councils will have power to set caps of not less than 180 days annually.

Author attribution:

Further information / assistance regarding the issues raised in this article is available from the authors, Fiona Nelson, Partner and Tina Kealy, Associate, or your usual contact at Moray & Agnew.

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