NSW Short-Term Rental Legislation Changes

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The NSW Government has introduced new regulatory framework to govern the short-term holiday letting industry. Short-term holiday letting has rapidly expanded in recent years due to the growth of online booking services. The new code of conduct will apply to online accommodation platforms, letting agents, hosts and guests.

Online accommodation platforms and letting agents will not be allowed to offer services to anyone, or any dwelling, that is listed on the exclusion register. Changes are also being made to the Strata Schemes Management Act 2015 so owners’ corporations can pass by-laws to ban short-term letting in their block, if the host is not present, and they get a 75 per cent majority vote.

New planning laws will allow short-term holiday letting under certain conditions. If the host is present, they can use their home for short-term holiday letting all year round as exempt development. That is, they do not need to submit a development application to local council.

If the host is not present, that residence can be used for short-term holiday letting up to 180 days per year in Greater Sydney, with 365 days allowed in all other areas of New South Wales. Councils outside Greater Sydney will have the power to decrease the 365 day limit to no less than 180 days per year. What is important to understand is that it is 180 booked nights, which equates to roughly 240 nights at a usual occupancy rate. Also if you are a homeowner that is present on the property then part of the house (one room or more) can be rented 365 days a year with no restrictions

The code of conduct will establish a ‘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 years and be listed on an exclusion register. Strata scheme management laws will be amended to clarify that by-laws can prohibit short-term holiday letting, but only for lots that are not a host’s principal place of residence.

To summarise -:

If the owner is present on the property then part of the house - such as rooms / a room can be rented 365 days a year with no restrictions.

Strata bodies can only prevent investment property owners from leasing their property out short term if 75% of the owners are against it.

A 180-day cap has been introduced for properties in Greater Sydney where the owner does not live on site, such as investment properties.

Properties in regional NSW will be uncapped, however this is at the council’s discretion and they have the option to cap no lower than 180 days per year.

This cap refers only to booked days, not advertised, so a 75% occupancy rate can end up being 240 advertised days. This cap is generous compared to other cities with more restricted rules such as Paris where the cap is fixed at 60 days only.

The NSW Parliament passed the Government’s short-term holiday letting reforms on Tuesday 14 August and has now commenced.