Posted on September 14, 2017 by Megan Hawley and
Greater (un)certainty lies ahead for Airbnb and Short-term Holiday Letting in NSW
Recently, the NSW Government released an Options Paper on Short-term Holiday Letting (STHL) in NSW. The STHL industry in NSW has expanded significantly in recent years and in response to this, in 2016, the NSW Government conducted a public inquiry on the Adequacy of Regulation of Short Term Holiday Letting in NSW (the Inquiry). The Options Paper has been released as a result of the 12 recommendations made in the Inquiry’s final report (published on 19 October 2016).
Interested parties have until 31 October 2017 to provide submissions in relation to the Options Paper.
This blog will give a brief overview of the types of STHL, its impacts, the current regulatory regime for managing STHL in NSW, and the regulatory options discussed in the Options Paper which the Government is considering adopting in order to establish a whole of Government regulatory framework for STHL, which balances the economic benefits of STHL with management of its social and environmental impacts.
Types of STHL
STHL generally takes four forms in NSW:
- rental of one or more rooms (including room sharing) with the host present;
- rental of a whole dwelling (principal residence) with the host away;
- rental of a holiday dwelling (non-principal residence) with the host away; and
- rental of a dwelling solely reserved for STHL.
As STHL takes place in existing dwellings it is difficult to quantify the potential impacts of STHL above and beyond what would normally be expected in residential areas.
However, STHL occupants may differ from most long-term residential occupants in that they may:
- prioritise leisure or festive activities;
- be unfamiliar with local rules to manage amenity; and
- be less concerned to maintain good neighbourly relations.
The impacts on the community which STHL has the potential to generate include:
- noise (including party houses);
- traffic and parking;
- safety and security;
- housing availability (housing affordability and competition with long term rentals); and
- broader industry impacts (cross over with other short-term accommodation providers).
These impacts vary between regional and metropolitan areas, and between detached dwellings and apartments (where impacts tend to be greater due to the proximity of neighbours, their reliance on shared facilities and the high proportion of whole-premises STHL with no host present).
Anecdotal evidence obtained during the Inquiry suggests that potential impacts tend to be lower where the principal resident (owner or tenant) is present during STHL.
Current Regulation of STHL in NSW
Currently STHL in NSW is regulated through the NSW planning system in an inconsistent manner.
An example of the current regulation regime in action was seen in a Land and Environment Court decision which we have previously blogged about:
Dobrohotoff v Bennic  NSWLEC 6
Some of the issues the Inquiry identified with the current regulation of STHL through the planning system were that:
- few Local Environmental Plans (LEPs) specifically refer to STHL;
- there is no standardised definition of STHL in the LEPs that do refer to it; and
- those LEPs that do refer to STHL have different thresholds for when STHL requires development consent.
For these reasons, the Inquiry concluded that there would be value in creating a standardised regulatory approach throughout NSW whilst also providing enough flexibility to have variations in an area’s specific circumstances taken into account.
Regulatory options discussed in the Options Paper (both individually and in combination with other options) to manage the impacts of STHL are discussed below.
The self regulation options put forward include the adoption of a strengthened code of conduct based on the Holiday Rental Code of Conduct to be managed by the NSW Government, improved education for industry participants, more robust complaint management requirements and greater ongoing monitoring and reporting by the industry.
Changes to Strata Laws
While an owner/occupier in a strata scheme is obliged to comply with by-laws, a STHL occupant may not have the same interest in by-laws as long-term residents. They are also likely to have left the property by the time any enforcement action could commence.
As a result, the Options Paper suggests a number of changes that could be introduced under strata scheme management laws to deal with these issues. These options include imposing vicarious liability on lot owners for the actions of short-term lessees, allowing for increased levies for lot owners who engage in STHL, introducing a civil penalty for creating a nuisance and expanding the powers of the NSW Civil and Administrative Tribunal to deal with problems arising from STHL. There is also the option to enable owners’ corporations to prohibit or restrict STHL in their strata schemes.
Regulation through the Planning System
As mentioned above, there is no consistent definition of STHL across NSW. A consistent definition of STHL is noted in the Options Paper as the starting point for improving regulation of STHL through the planning system.
The Options Paper proposes the following definition for STHL:
a dwelling, or part of a dwelling, that provides short-term accommodation, but does not include tourist and visitor accommodation.
As well as adopting a standard definition of STHL, the Options Paper suggests that planning controls could be used to manage the operation of STHL properties, taking into account factors such as:
- length of stay (days per stay, days per year or a combination of both);
- number of bedrooms;
- presence of a host;
- compliance with a code of conduct; and
- wast management arrangements,
in order to determine whether the proposed STHL development is exempt development, complying development or development requiring consent. The planning regulatory framework could beceome more interventionist when the potenetial impacts of STHL intensify and/or reflect commercial uses.
Using the planning system to manage STHL would enable investigation, compliance and enforcement powers which presently exist under the Environmental Planning and Assessment Act 1979 to be utilised to manage the impacts of STHL.
Registration or Licensing
Registration or licensing is another option put forward in the Options Paper for managing impacts associated with STHL.
A registration process could provide greater information for potential users, help manage safety and amenity issues and also help monitor the management of the industry.
Licensing could be used to address issues that would not be addressed through the planning framework (such as by limiting the number of STHL properties run by a single operator) and could work within the existing planning system as other licensing schemes work (such as child care and liquor licensing).
Incentives for improved industry self-regulation could also be explored via licensing exemptions.
In order to determine which policy framework is most appropriate to regulate STHL, the NSW Government is calling for submissions from a range of stakeholders, including:
- local councils;
- tenants and holidaymakers;
- affected neighbours;
- strata corporations;
- STHL businesses; and
- traditional accommodation operators.
As noted above, submissions close on 31 October 2017. Submission forms can be accessed here.
If you would like any assistance preparing a submission on the Options Paper, or if you have current issues in relation to the regulation of STHL, please contact Megan Hawley, Partner on (02) 8235 9706 or email email@example.com