Posted on May 17, 2023 by Stuart Simington and Emma Wei 8

IPC Advice on Short-Term Rental Accommodation – Key Takeaways

Short-term rental accommodations (STRA), such as those offered through Airbnb and other similar online platforms have become increasingly popular in tourist destinations across Australia, particularly in desirable coastal regional locations. However, the rapid growth of the STRA industry is thought to have impacted on housing affordability, the community and character of local neighbourhoods.

To alleviate this, the Byron Shire Council (Council) proposed a change to the cap on the number of nights that a residential premises can operate as a non-hosted STRA. The NSW Independent Planning Commission (IPC) was asked to consider the issue and has released its advice with recommendations.

Planning Controls

One of the principles of State Environmental Planning Policy (Housing) 2021 (Housing SEPP) is to support STRA “as a home-sharing activity and contributor to local economies, while managing the social and environmental impacts from this use” (see section 3). It designates STRA that meets specific requirements to be ‘exempt development’ and imposes a non-hosted STRA cap of 180 days each year on such use of residences in prescribed areas, including the Byron Shire.

The Council proposed (Planning Proposal) to amend the exempt development requirements is to reduce the 90 day cap in Byron Shire with the inclusion of some designated precincts with no STRA cap.

The IPC’s Findings

The IPC found that the Planning Proposal would be unlikely to achieve its stated objective and might result in unintended economic and social outcomes.

The proposed 90-day cap on non-hosted STRA was not a level that was sufficiently low to incentivise non-hosted STRA owners to return properties to the long-term rental market, while potentially reducing visitor numbers and impacting the positive economic activity associated with STRA tourism.

The IPC was also concerned about the equity of proposed precinct boundaries and the social amenity impacts from the intensification of STRA in 365-day precincts.

Based on its findings, the IPC recommended that the Planning Proposal should not proceed in its current form and made several recommendations including the following:

1. Tighten the local exempt development cap to 60 days for non-hosted STRA
2. Define STRA as a type of “tourist and visitor accommodation” and thereby restrict permissible use
3. Require development consent for non-hosted STRA beyond the 60-day cap
4. Prevent subsequent conversion of new housing supply to non-hosted STRA and support transitional arrangements to current non-hosted STRA
5. Consider legal and policy options to encourage a return of dual occupancy and secondary dwelling properties to long-term rental
6. Introduce a levy on all STRA properties to provide an income stream to address amenity, infrastructure, and service impacts from STRA on the local community

The recommendations reflect the somewhat unique housing market, development controls, and locality of the Byron Shire.

Before other Councils consider any similar policies, they would need to consider whether their precinct displays similar characteristics and if so, the IPC recommends the consideration of alternative methods to reduce the prevalence of STRAs such as reducing approval times for residential development applications, increasing land availability through rezoning, infill initiatives, and increasing density controls.

You can read the Independent Planning Commission’s full report here.

If you have any questions about this blog post, please leave a comment below or contact Stuart Simington on 02 8235 9704 or Emma Wei on  02 8235 9725.