Airbnb & short-term rentals in NSW

Short-term rentals (usually less than 30 days) present an opportunity for homeowners to make or save money for a brief period.  The advertising tells you that you can then put your money to good use, such as mortgages, holidays or other treats.

For most of us, it is hard to save similar sums over similar timeframes and from our normal earnings.  Some have made a business from the short-term rental market. On 24 November Sky News reported a case where an Airbnb operator earned $5.3million across 247 listings.

For many short-term rentals simply mean that as a resident you are prevented from peacefully enjoying your home.  Sadly, on occasion, the costs to repair damage and wear and tear to common property adds to the anguish of these suffering neighbours.

We published our Info Guide on this topic in October 2016. Predictability since then the activity and debate continues.

The short-term rental debate in 2017

In July the NSW government released a public options paper on short-term holiday letting. It was open for feedback for three months.  The aim was to introduce consistent regulations across the state given the ad-hoc scenarios that occurred with different local council approaches. The proposal included giving NCAT and owners corporations more power to handle disputes. One option was that “the letter” needed to obtain a licence and pay a levy.

A summary of the options is on page 27 of the Options Paper. Appendix 4 provides a summary of other Australian and international jurisdictions as at July. Interestingly, from 1 May 2017, it became illegal in New York City to advertise an entire unoccupied apartment for less than 30 days.  In London, you can legally let up to 90 nights, and in Paris, you can let up to 120 nights.

On release of the options paper, the ABC published an article which includes comments from the “Neighbours not Strangers” spokesperson.  You can read Daily Telegraph’s article where the main message appeared to be that the suggested options included a “nuisance tax”.

In August the SMH estimated 6,000 homes have been taken out of the permanent rental market as landlords are now listing online as short-term rentals. This article was about the changing nature of renting in NSW.

In September, an owner took her owners corporation to NCAT and successfully won the argument that she did not need to comply with the schemes by-laws which explicitly prohibited short-term rentals. It was a landmark case that troubled many in the NSW strata community. A similar by-law was successfully upheld by the Court in WA.  Read the article by Jimmy Thompson & Sue Williams.

The same month a Financial Review article stated that in a survey of 1,000 Sydney’s inner city residents, commissioned by the City of Sydney, more than 40% of respondents oppose short-term renting, and believe that strata should have the option to ban short-term rentals within their building. A similar story was published in October in an article by Property Observer.

SCA NSW advocated for legislative reform that enables a clear distinction between strata scheme use and strata scheme governance. The position is about appropriate uses of the building, and how to deal with burdens placed (intentionally or unintentionally) on other residents. Interestingly, the SCA NSW position has remained similar since 2012 when overcrowding and short-term rentals first gained negative momentum.

In November, Planning & Environment NSW advised that public engagement was closed and that all feedback was under review.

The US position – Community Association Insitute (CAI)

The following statements are sourced from CAI materials that were kindly provided by the current CAI President.

  • The pace of this new platform has quickly surpassed appropriate government response and regulation and it is essential that community associations – housing more than 68 million residents in the United States alone – have a voice in any legislative and regulatory process. Read the CAI White Paper on this topic.
  • Each homeowners association should have the opportunity to choose what is best for the character of their community. It starts with a conversation amongst the owners to determine the policy that is best for the community. We acknowledge that no two communities are the same.
  • If considering the short-term rental market for your home; check your local laws (city, town, country), check your insurance requirements (you might not be covered for incidents that occur from short-term rentals) and share your rules. Your neighbours should be confident your “guests” will be treating their neighbourhood like their home.

The following policy positions was approved at committee level and then adopted by the CAI Board in May 2017.

  • CAI supports short-term rental regulation that is consistent with the association’s governing documents, federal, state and local law and serves to protect and preserve the ability of community association homeowners to manage their affairs.
  • CAI opposes governmental regulations that would intrude upon community associations’ board of directors’ autonomy to serve the best interest of the association. Short-term rental regulation should not impair association contractual covenants and take decision-making authority away from community association homeowners.  This degrades the very core of community association governance, which is based on private contractual obligations of the community’s homeowners.

Read CAI’s guide on short-term renting

Stay tuned for updates in 2018

Strata Plus undertakes to share the outcomes of the NSW Planning & Environment Options Paper review when it becomes available.