As many readers will be well aware (possibly from unfortunate and adverse experiences!), changes in technology resulting in easier bookings have led to ever increasing demands for short term rental accommodation (STRA) for holiday purposes. This demand led the NSW Government to undertake a review into the adequacy or otherwise of the regulation of STRA. In mid-June 2018, the NSW Government set out a framework to accommodate the demand and, at the same time, minimise impact on the community.
Consequently, the Government enacted legislation that clearly defined STRA and excluded it from the operation of the Residential Tenancies Act 2010 (NSW). A Code of Conduct relating to STRA was introduced in December 2020 which created minimum standards of behaviour and other requirements for industry participants together with potential consequences for breach of the Code such as being listed on an “exclusion register” or monetary penalties.
More recently, the Government has introduced the State Environmental Planning Policy (Affordable Rental Housing) Amendment (Short-term Rental Accommodation) 2021 (Policy), which will standardise the conditions under which STRA will be permitted.
The Policy will commence on 1 November 2021 in all Local Government Areas except in Byron Bay (where it will not commence until 31 January 2022 as a planning proposal from the Byron Bay Local Government Area to limit non –hosted STRA to 90 days in some areas is under consideration). Until this time, conditions under which STRA will be permitted will be particular to the relevant Local Council.
Section 54a of the Fair Trading Act 1987 defines 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”. The Policy defines short – term rental accommodation as “a dwelling used by the host to provide accommodation in the dwelling on a commercial basis for a temporary or short-term period”.
The Policy provides for STRA to be undertaken as “exempt development” if “hosted” for 365 days per year or if “non-hosted” for 180 days per year in Greater Sydney and certain LGAs and otherwise 365 days per year. Hosted STRA simply means that the host will reside in the premises at the time of the provision of the accommodation. Non-hosted STRA, of course, means that the host does not so reside. Any non-hosted STRA to the same person or persons of 21 or more days’ duration is not counted in the 180 day period.
A further condition for the STRA to be undertaken as exempt development is that it be provided in existing, lawfully constructed residential accommodation. Certain venues being a boarding house, group home, hostel, rural workers’ dwelling and seniors housing are expressly excluded. The accommodation must be permitted with or without development consent on the land on which the dwelling is located. It must not be or be part of a refuge or crisis accommodation and the use must otherwise be lawful.
Significantly, a dwelling must not be used for the purpose of STRA if it does not comply with the “fire safety standard” provided for in the Environmental Planning and Assessment Amendment (Short-term Rental Accommodation) Regulation 2021. This standard is to be approved by the Planning Secretary and published on the website of the Department of Planning, Industry and Environment.
All proposed accommodation must be registered on the STRA register, which will be integrated into certain STRA booking websites to enable monitoring. The STRA register will aim to ensure compliance with the standard as well as providing a means of monitoring adherence to the exempt development conditions.
A question arises as to the status of development consents provided by Councils prior to 1 November 2021 which permit the use of dwellings for STRA. It is likely that such consents will benefit from the existing use rights afforded under the Environmental Planning and Assessment Act 1979 (NSW). Legal advice should be obtained in the event that any issue arises relating to the existing use of a dwelling for STRA.
Notably, the Policy does not prevent the making of a by-law by a strata scheme pursuant to section 137A of the Strata Schemes Management Act 2015 (NSW) to prohibit the a lot being used for STRA in the event that the lot is not the “principal place of residence” of the purported host.
Author: Tom Waugh – Kerin Benson Lawyers