Regulation of short term rental accommodation

Posted on Dec 13, 2018 by Liam Tobin   |   Categories: Property & Conveyancing

How will those who use their properties to provide short term rental accommodation, and their neighbours, be affected by looming changes to planning laws and the plans of Newcastle City Council?

With the rise in the number of new apartment buildings and other residences in Newcastle; increases in high volume tourism events such as the supercars and music festivals coupled with the enduring scenic and cultural tourism attraction of Newcastle; owners of properties in Newcastle have embraced private short term rental accommodation (STRA) brokerage services such as Airbnb and Stayz, not always to the delight of neighbours.

The NSW Government has announced a new a regulatory framework to govern the short-term holiday letting industry.

Newcastle City Council has subsequently indicated that it shall exercise an option under the new framework to reduce the amount of time permitted for short term rentals to 180 days per year where the host is not present at the property, placing Newcastle in line with the timeframe imposed on the greater Sydney region by the framework.

This timeframe does not apply to accommodation where the host is present during the stay.

The framework shall also establish a mandatory code of conduct, with complaints procedures and a strike system for any behaviour which unreasonably interferes with a neighbour’s quiet and peaceful enjoyment of their home.

Guests or hosts who commit two serious breaches of the Code within 2 years will be banned for 5 years and placed on a register.

Changes under the framework aren’t anticipated to commence until 2019. However, property owners currently or considering providing STRA need to ensure that they aren’t liable for breaches to other rules currently imposed on them.

Owners of strata lots need to be particularly careful not to breach the by-laws adopted by their owners corporation.

While each owner should consult their by-laws, the widely adopted model by laws contained in the Strata Schemes Management Regulation 2016 (NSW) already prohibit interference with the peaceful enjoyment of those in neighbouring lots by an owner, occupier, or invitee.

The occupier of a lot is further required to notify the owners corporation of changes in the existing use of the lot, including the use for short-term or holiday letting.

Breaches of these by-laws can incur fines of $1,100 and $2,200 for repeat offenders. Fines of up to $11,000 may also be imposed in instances where STRA guests breach restrictions on the maximum number of persons staying in a unit.

Once introduced, breaches of the new framework will also result in a breach of the model by-laws as the owner or occupier of a lot must ensure compliance with planning requirements and ensure that the lot is not used for any purpose that is prohibited by law.
The framework shall also confirm the ability for an owners corporation to adopt a new by-law prohibiting short term holiday letting in strata lots that are not the principal place of residence of the host.

Only time will tell what impact the new framework and council’s planned reduction of the days of operation will have on the number of property owners providing STRA in Newcastle. The only constant being that it remains important to seek legal advice if you are unsure of your rights or obligations as a provider, tenant or neighbour.