Hot Strata Topics

An update on Short-Term Holiday Lettings (Airbnb).

In our past Newsletters we provided you information on the much talked about Short Term Holiday Lettings in a Strata property. This space has evolved, however there is still some finalizing to be done. Below is an update on what has happened to date.

On 14 August 2018, the NSW Parliament passed the Fair Trading Amendment (Short Term Rental Accommodation) Act 2018 (Amendment Act). The Amendment Act has not yet commenced and is therefore not law.

The Amendment Act will give the Government power to introduce a code of conduct to regulate participants in the short-term rental accommodation industry. The code of conduct has not yet been released. However, it is intended that the code of conduct will:

• contain rules for hosts providing and guests using short term accommodation arrangements that are intended to prohibit anti-social and irresponsible behaviour,

• allow complaints to be made about specific short-term accommodation arrangements,

• establish a Government body to administer the code, administer complaints made about breaches of the code and issue warnings for breaches of the code,

• introduce a “two strikes and you are out” policy under which any hosts or guests who have complaints made about them and are found to have committed two serious breaches of the code are placed on an exclusion register and prohibited from providing and using short term accommodation arrangements for up to five years.

Short Term Accommodation By-Laws

The Amendment Act will also introduce section 137A into the Strata Schemes Management Act 2015. Section 137A has not yet commenced and is therefore still not law. Section 137A will permit an owners corporation to make a by-law to prohibit a lot being used for the purposes of a short term rental accommodation arrangement but only if the lot is not the principal place of residence of the person who is giving another person the right to occupy the lot pursuant to that short term rental accommodation arrangement.

Section 137A says that a by-law is ineffective to the extent that it purports to prevent a lot being used for the purposes of a short-term accommodation arrangement if the lot is the principal place of residence of the person providing the short-term accommodation – section 137A does not invalidate the whole by-law.

One of the flaws in section 137A is that it will prevent new by-laws stopping owners who use a lot as their principal place of residence entering into short term accommodation arrangements for the lot whilst they themselves are on holidays and not living in the lot.

Exempt Development

The NSW Government has also announced its intention to make changes to planning legislation concerning short term accommodation. Those new laws have not yet been written but they are intended to amend the Environmental Planning and Assessment Act 1979.

Those amendments are intended to:

• make short term accommodation in a lot where the host is present exempt development all year round in NSW;

• make short term accommodation in a lot where the host is not present exempt development for up to 180 days per year in the Sydney Metropolitan Area and for up to 365 days per year in other areas.

• If the planning laws are changed in the manner proposed, and short-term accommodation does become exempt development, it is likely that irrespective of any by-laws and without the consent of the Council, this will be permitted.

Further, once section 137A commences, it will be clear that a new by-law cannot prohibit an owner or occupier who uses a lot as his or her principal place of residence using a lot for short term accommodation. However, the position regarding an existing by-law which has already introduced such a prohibition is not clear. If the existing by-law was made under the Strata Schemes

Management Act 1996 and was validly made, then there is a good argument that the by-law remains valid.

Ultimately, if the reforms to the laws regulating short term accommodation in NSW are introduced:

• owners and occupiers who live in their lots will be able to use their lots for short term accommodation arrangements including through platforms such as Airbnb and Stayz year round; and

• owners and occupiers who do not live in their lots will be able to use their lots for short term accommodation arrangements for up to 180 days per year in Sydney and up to 365 days per year elsewhere; without Council approval and despite what any by-law says.

……keep watching this space for further updates on short term accommodation as they come to light…