With the increasing prevalence of property owners renting their property short-term, there have been moves by the State Government towards increasing the regulation of short-term accommodation in New South Wales.
Changes to planning policy
A new planning policy was announced by the Minister for Planning and the Minister for Better Regulation on 5 June 2018 that would expand the definition of exempt development under a planning instrument to cover short-term rental accommodation as follows:
- where the owner of the property is present on-site overnight, for 365 days a year; and
- where the owner of the property is not present on-site overnight, for 180 days a year in the Greater Sydney area, and for 365 days a year in all other areas of New South Wales (this number can be reduced by councils outside the Greater Sydney area to a total of no less than 180 days a year).
Changes to legislation
The Fair Trading Amendment (Short-Term Rental Accommodation) Bill 2018 (NSW) passed through the Legislative Assembly on 20 June 2018 (it has been introduced, but is yet to be debated, in the Legislative Council), and anticipates amendments to legislation as follows:
- The insertion of a new Division 4A of Part 4 of the Fair Trading Act 1987 (NSW) allowing the creation of a code of conduct that will apply to owners who wish to short-term rent their property, including a new section 54A which will define a “short-term rental accommodation arrangement” as “a commercial arrangement for giving a person the right to occupy residential premises for a period of not more than 3 months at any one time”; and
- The insertion of a new section 137A into the Strata Schemes Management Act 2015 (NSW):
- permitting an owners corporation to pass a by-law (by special resolution) to prohibit lots in the strata scheme being used for the purpose of short-term rental accommodation arrangements, but only if the relevant lot in the strata scheme is not its owner’s principal place of residence; and
- prohibiting an owners corporation passing a by-law to prevent lots in a strata scheme being used for the purpose of short-term rental accommodation arrangements if the relevant lot in the strata scheme is its owner’s principal place of residence.
Currently, by-laws that have been passed by owners corporations that purport to prohibit owners in a strata scheme from short-term renting their lot run the risk of being held invalid under section 139(2) of the Strata Schemes Management Act 2015 (NSW), which states that “no by-law is capable of operating to prohibit or restrict the devolution of a lot” (see Estens v Owners Corporation SP 11825 [2017] NSWCATCD 52).
The amendments to the Management Act contemplated by the Fair Trading Amendment (Short-Term Rental Accommodation) Bill 2018 (NSW) appear to be an attempt by the State Government to strike a happy medium between permitting owners of lots in a strata scheme the right to deal with their property as they see fit (especially where that owner resides in the lot full time), and satisfying owners corporations’ concerns over lot owners renting out their property to a revolving door of tenants.