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Is the new NSW Government policy a win-win for short-term (Airbnb style) holiday letting?

 

At long last, the NSW Government has announced its policy for short-term holiday letting. It is a compromise policy, encouraging short stay holiday rentals but regulating it by a strict code of conduct.

The Announcement

The NSW Minister for Better Regulation Matt Kean said: “The Government’s short-term holiday letting plan will support the sharing economy and give consumers more choice while cracking down on bad behaviour”. This is the policy:

  • When the host is present, allowing short-term holiday letting as exempt development 365 days per year (i.e. no Council approval required);
     
  • When the host is not present (i.e. investment properties), limiting short-term holiday letting to 180 days per year in Greater Sydney, and outside Greater Sydney as allowed by Council from 180 days to 365 days per year;
     
  • Owners Corporations in strata title schemes will be allowed to adopt a by-law, with a 75 per cent majority, preventing short-term letting in their block if the host does not live in the unit they are letting out;
     
  • A mandatory Code of Conduct for online accommodation platforms, letting agents, hosts and guests to address impacts like noise levels, disruptive guests and effects on shared neighbourhood amenities.

The full announcement by the Minister for Innovation and Better Regulation Matt Kean MP is: Short-term holiday letting plan a win-win (5 June 2018)

The 180 day limit

First and foremost, a host who ‘rents out a spare room’ to guests who stay for holidays or business can do so all year round, so long as they live on the premises. No Local Council Approval will be required (i.e. it is an exempt development), except in bushfire zones.

There will be limits on the number of rooms, and also where the host operates a business, such as bed and breakfast accommodation, which will be determined. But not even a Strata Scheme will be able to prevent an owner-occupier from renting out spare rooms in their apartment!

The 180 day limit applies to renting out whole houses, home units, villas, and in fact any residential property, without Local Council Approval.

The Minister’s explanation is: “The 180 days a year limit approximately equates to weekends, school holidays and public holidays so we felt this was a fair and balanced approach”.

In practice, with a 25% vacancy rate, a whole property could be advertised for short-term letting 240 days of the year, so long as the booked days are limited to 180.

Questions and comments on the 180 day limit

The 180 day limit raises five questions and some comments:

Q1 Who will police the 180 day limit? It is proposed that NSW Fair Trading will have powers to police online platforms and letting agents. Presumably, it will have the power to obtain rental records from Airbnb and HomeAway (formerly Stayz) and holiday rental agents upon receiving complaints from ‘concerned neighbours’.

Q2 Where is the Greater Sydney Region? According to the Greater Sydney Region Plan which was released on 23 March 2018, the metropolis is bounded by the Hawkesbury River to the north, the Blue Mountains to the west and to the south the Bargo/Appin region south of Campbelltown. The exact boundary remains to be determined.

Q3 Will short-term holiday hosts be required to register? Japan has recently adopted a 180 days limit coupled with the mandatory registration of all short-term holiday letting places – online platforms are co-operating by not allowing listings without a registration number. The NSW policy will not require registration.

Q4 When does the 180 day limit start? All we have is an announcement. New laws will be needed. They will have a start date and presumably set the limit of 180 days over a calendar year – 1 January to 31 December.

Q5 Will the online platform keep count of visitor nights? The Airbnb booking platform not only keeps count, but will automatically manage bookings so as not to exceed the limit. Of course, this does not apply where more than one booking platform is used.

Comments

NSW and Japan will have a 180 day cap, which is the longest time limit adopted for short stay holidays around the world, in places where they are limited.

The number of days, owner in residence and other restrictions vary around the world.

For instance: in New York, the host must be present for lettings of less than 30 days; in Chicago, it is limited by district, but not by days; in San Francisco (the home of Airbnb), it is limited to 90 days where the host is not present; Paris has a 120 day limit for short-term letting but no registration; London has a 90 day limit, and Amsterdam a 60 day limit for ‘entire place’ short term rentals; Singapore is proposing a 90 day limit, licensing and guest registration.

Limiting short stay rentals in strata title schemes

Some strata title schemes located in beachside suburbs, in suburbs with good transport and eating places, and in around business districts where there is a high demand for short stay rentals wish to ban stop short stay rentals from their buildings because of the noise, the over-use of common facilities and disturbance they can cause.

The new policy will allow strata title schemes to outlaw short stay rentals, that is, for a term of less than 90 days, of a whole apartment.

The new policy will not allow strata title schemes to ban owner-occupiers from renting out rooms in their apartment for short stays.

Presumably, strata title schemes which have already adopted by-laws for short-term letting will be required to submit them to a new general meeting, to be passed with a 75% majority (of those present and voting).

The Code of Conduct

The online platforms already use the Holiday and Short Term Rental Code of Conduct developed by the Holiday Rental Industry Association, which was adopted nationally in 2015. It will become mandatory for online platforms, letting agents, hosts and guests.

The proposal is to give the Code ‘teeth’ to win political support from neighbours, particularly in strata residents. In his announcement, the Minister said:

“Under our ‘two strikes and you’re out’ policy, hosts or guests who commit two serious breaches of the Code within two years will be banned for five, and be listed on an exclusion register.”

“These are the toughest laws in the country and will make sure residents are protected while ensuring that hosts who do the right thing are not penalised.”

The NSW Government will introduce a new dispute resolution process to resolve complaints, administered by NSW Fair Trading, as opposed to the Local Councils dealing with complaints.

Concluding Comments

Short-term letting hosts can breathe easy, provided their guests don’t upset the neighbours.
The Minister emphasised that “the reforms recognise the estimated $31 billion annual contribution of online booking platforms to the Australian economy”.

Airbnb welcomed the new NSW Government policy – “The rules will be a boost to the NSW economy and a welcome relief for the countless small, local businesses who rely on the Airbnb guest dollar”; and “we’re generating $3,700 a year for a typical host in Sydney, we have 55,000 listings in this area generating economic benefit to people and that money is staying here.”

Boutique hotels, B & B s and serviced apartments will benefit from this policy. With Council Approval to operate all year round, they will continue to use online platforms as a cheap distribution channel to sell hotel rooms: Airbnb and Homestay charge a 3% commission to hosts as opposed to Online Travel Agents (OTAs) which charge up to 25% commission.

Strata Title Schemes will be able to vote to ban short stay rentals of whole apartments. And neighbours will be able to complain about breaches of the Code of Conduct.

So, it’s a win-win for all.

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