The growth has created more business opportunities for property owners and property managers which is great, but it has also seen an influx of unruly guests disrupting (and upsetting) neighbours — which is bad.
To address this problem, while also acknowledging the positive impact of online booking platforms on the economy, the NSW Parliament passed the Government’s short-term holiday letting reforms on August 14, 2018, creating a new regulatory framework for the short-term holiday letting industry.
The new NSW short-term holiday framework
So what is included in this new framework? According to this article from NSW Fair Trading website, the new framework will include new planning laws, an industry Code of Conduct and new provisions for strata scheme by-laws.
Let’s take a closer look at each one to gain a better understanding of the new regulation.
New planning laws
One of the most important provisions of the new framework is the conditions and number of days in a year a host’s property can be let.
- If the host is present: Their home can be used for short-term holiday letting all year round as exempt development (no need to submit a development application to local council).
- If the host is not present (Greater Sydney): The residence can be used for short-term holiday letting up to 180 days per year.
- If the host is not present (Other areas of NSW, outside Greater Sydney): 365 days allowed but Councils will have the power to decrease the limit to no less than 180 days per year.
Code of Conduct
A mandatory Code of Conduct will also be included, with a strict “2 strikes and you’re out” policy. The Code applies to hosts, guests, online platforms, and letting agents.
2 strikes and you’re out policy
Under this policy, hosts or guests who commit 2 serious breaches of the Code within 2 years will be banned for 5 years and will be listed on the online exclusion register.
An online register will be created to record said ‘strike outs’. Platforms and property agents are required to check the online register before offering their services to customers to ensure that hosts and/or guests cannot ‘platform shop’ to avoid the consequences of their previous misconduct.
Failure to perform a background check on the registry will result in penalties: $1.1million for corporations and $220,000 for individuals.
What is considered a strike?
While the details of the Code are yet to be finalised, NSW Fair Trading states that a "strike will generally include any behaviour which unreasonably interferes with a neighbour’s quiet and peaceful enjoyment of their home."
Strata schemes by-laws
Strata scheme management laws will also be amended to allow owners corporations to adopt a by-law, preventing short-term letting for properties that are not the host’s principal residence.
So, hosts will still be able to let a spare room in their home, and also be allowed to let their principal place of residence while they are away on holidays.
Guidelines will also be developed to advise owner's corporations on how to use existing strata laws to deal with short-term holiday letting.
- The new framework will start in 2019
- The Code of Conduct will be developed with Government agencies, and industry and community groups in 2018.
- The reforms will be reviewed a year after commencement.