NSW Govt short-stay traveller accommodation policy – the latest update

At last, the NSW Government has introduced the final part of the planning framework for short-term rental accommodation, to add to the Strata Schemes Law and Code of Conduct regulatory frameworks already introduced, to complete its Airbnb-style / holiday rentals policy.
This is a three part outline:

Part 1 - Strata Schemes – a partial ban (from 10 April 2020)

A Strata Scheme may make a strata by-law which prohibits a residential strata lot (a home unit, apartment or townhouse) being used for short-term rental accommodation if the strata lot is not the principal place of residence of the owner or the tenant of the strata lot. See s 137A Strata Schemes Management Act 2015.

This ban applies to investment properties only. If short-term rentals ban by-law is made, investors can only rent their strata lot on standard residential tenancies where a minimum 3 month term applies. If no by-law is made, investors can rent for short-term stays up to 180 days or all year round, depending on whether or not their local council has adopted a 180 day cap.

Even if a short-term rentals by-law is made, the ban does not apply to owners or tenants who use the strata lot as their principal place of residence. They can rent out their strata lot for short-term stays while they live there (by the room) or while they are away (as a whole), for up to 180 days or all year round, depending on whether or not their local council has adopted a 180 day cap.

What is a principal place of residence? No definition is provided. Therefore, adopting the NSW Land Tax Management Act definition:

principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.

Part 2 - Code of Conduct for short-term rentals (from 18 December 2020)

The Code of Conduct for the Short-term Rental Accommodation Industry sets minimum standards of behaviour for booking platforms, letting agents, hosts, guests and facilitators (i.e. authorised representatives of a letting agent or host).

Booking platforms & letting agents (and facilitators):

must provide information about the Code; must advise hosts and guests how to lodge a complaint with the Commissioner of Fair Trading; must keep records for 3 years; and (from 1 November 2021) must not advertise or facilitate a short-term rental for the premises unless the host and the premises are registered on the Premises Register; must not advertise premises which are on the exclusion register or allow persons recorded on the exclusion register to book.

Hosts (and facilitators):

must not breach the criminal law or the planning law; must provide the premises in the same state as advertised or as advised; must have third party public liability insurance cover for personal injuries and death; must be contactable to manage guests, the premises, neighbourhood complaints and other issues within ordinary hours and for emergencies after hours; must give guests contact details for an emergency electrical service provider, an emergency plumbing service provider and Australian emergency services; must provide a copy of the Code and the strata by-laws for strata premises; must take reasonable steps to ensure their guests comply with the code; must advise the strata owners corporation they are using the premises for short-term rentals and provide their contact details and take reasonable and timely steps to address their concerns; and (from 1 November 2021) must not advertise or facilitate a short-term rental for the premises unless the host and the premises are registered on the Premises Register; must not advertise premises which are on the exclusion register or allow persons recorded on the exclusion register to book.

Guests:

must not breach the criminal law or the planning law; must not create noise likely to harm, offend, or unreasonably disrupt or interfere with the peace and comfort of neighbours and other occupants of the premises; must not act in a violent or threatening or manner that could reasonably be expected to cause alarm or distress to neighbours and other occupants of the premises; must not interfere unreasonably with the use or enjoyment of common property by neighbours and other occupants of the premises in a strata or community scheme; must not damage the premises any common property or any other communal facilities or public property in the vicinity; must not damage the personal property of neighbours of the premises or other occupants of a strata or community scheme; after the end of the occupancy period, must not retain any keys, security passes or other instrument that facilitates access to the premises; must take reasonable care of the host’s property at the premises; must notify the host or the host's representative of any dispute or complaint about a guest’s or visitor’s behaviour as soon as possible after the dispute or complaint arises; is responsible for the actions of the visitors they invite onto the premises during the occupancy period and must ensure visitors behave as if they were a guest on the premises; and (after 1 November 2021) a guest who is recorded on the exclusion register must not enter into any short-term rental accommodation arrangements as a guest.

Part 3 - Planning Policy – caps, standards and premises register (from 1 November 2021)

The new planning policy is the State Environmental Planning Policy (Affordable Rental Housing) Amendment (Short-term Rental Accommodation) 2021. The express aims of the policy are:

  1. to support short-term rental accommodation as a home sharing activity and contributor to local economies, while managing the social and environmental impacts from this use,
  2. to provide for the safety of users of short-term rental accommodation who may be less familiar with the dwelling,
  3. to clarify the types of housing that may be used for the purposes of short-term rental accommodation.

This is a summary:

  • A new definition for Short-Term Rental Accommodation (‘STRA’)

    The new definition is:

    short-term rental accommodation means a dwelling used by the host to provide accommodation in the dwelling on a commercial basis for a temporary or short-term period.

    By using the words on a commercial basis it means that home stays by relatives and friends in dwellings occupied by hosts - the owner, tenant or permanent residents - are not treated as STRAs.
     
  • An exempt development pathway for hosted and non-hosted STRAs

    Both hosted (where the host resides in the premises) and non-hosted (where the host does not reside in the premises) STRAs are exempt developments (i.e. do not require Development Consent from the Local Council to be used as STRAs) if:
     
    1. they have been lawfully constructed to be used for the purpose of residential accommodation; and
    2. they are not a boarding house, group house, hostel, rural worker’s dwelling or seniors housing; and
    3. must be residential accommodation permitted on the land on which the dwelling is located; and
    4. must be registered on the STRA register; and
    5. must not be refuge or crisis accommodation provided by an authority or other body; and
    6. must have a current fire safety certificate or fire safety statement; and
    7. the use of the dwelling for the purposes of short-term rental must otherwise be lawful; and
    8. the dwelling must not be a moveable dwelling (i.e. not a caravan).
       
  • A 180 day limit restriction for non-hosted STRAs applies in many parts of NSW

    Originally, a cap of 180 days was to apply to STRAs only in the Greater Sydney Region (which includes the Blue Mountains and the Central Coast) with no cap elsewhere. But some regional Councils wanted to a 180 day cap because they were concerned at the impact of STRAs on rental housing affordability if STRA were allowed for rental properties all year round.

    The new policy is that if the dwelling is located in the following locations, it must not be used for non-hosted short-term rental accommodation for more than 180 days in any 365 day period:
    1. the Greater Sydney Region (excluding the Central Coast Local Government Area)
    2. Ballina local government area
    3. Bega Valley local government area
    4. Byron local government area (does not start until 31 January 2022)
    5. Dubbo Regional local government area
    6. City of Newcastle local government area
    7. Clarence Valley local government area land as marked on the Clarence Valley Short-term Rental Accommodation Area Map
    8. Muswellbrook local government area land as marked on the Muswellbrook Short-term Rental Accommodation Area Map.
       
  • An exemption for bookings of 21 consecutive days or more from the day limits for non-hosted STRA

    The dwelling must be rented to the same person or persons for 21 consecutive days for the rental to not be counted within the 180 day limit restriction. This 21 day exemption will be useful for long-term visitors such as academics and businesspeople who often stay a month or two. As long as their stay is less than 3 months, they are not subject to the Residential Tenancies Act 2010 (NSW).
     
  • Minimum fire safety standards apply for dwellings used for STRA

    STRAs need to comply with fire safety standards and be certified annually under the Short-term Rental Accommodation Fire Safety Standard. The fire standards are:

    Single dwellings: a detached house or attached houses such as townhouses are required to have smoke alarms in every corridor or hallway associated with a bedroom; a heat alarm in any private garage attached to the dwelling; and evacuation diagrams on or next to the entrance door and on or next to the door inside every bedroom.

    Apartment buildings: multi-unit residential buildings are required to have smoke alarms in every corridor or hallway associated with a bedroom and on levels where there are no bedrooms; egress doors openable without a key; a portable fire extinguisher in the kitchen; a fire blanket in the kitchen; evacuation diagrams on or next to the entrance door and on or next to the door inside every bedroom.
     
  • A new Government-run online STRA register

    The Department of Planning has developed a Government-run STRA Register that will be integrated with booking providers. Registration on the STRA Register is a mandatory requirement before a person can undertake STRA in NSW and requires the registrant to confirm the STRA dwelling complies with the Short-term Rental Accommodation Fire Safety Standard.

    Registration on the STRA Register will be available from 10 April 2021 to allow hosts to register their dwellings before the new planning rules commence on the 1 November 2021.

© Copyright 2021 Cordato Partners