The rapid growth of short stay accommodation via Airbnb and Stayz has caused debate worldwide and right in our own backyard and sometimes a deal of controversy in places as different as Byron Bay and Sydney City. In response recently The NSW Government released an Options Paper on short-term holiday letting (STHL) calling for extensive feedback from the community and stakeholders.

The Options Paper is a logical step in determining the most effective way for the NSW Government to respond to the growth of the STHL industry, and builds on the earlier advice of the NSW Parliament Legislative Assembly Committee on Environment and Planning.

That report made the following recommendations;

  • allow home sharing, and letting a principal place of residence, as an exempt development;
  • allow empty houses to be let as exempt and complying development;
  • strengthen owners’ corporations’ powers to manage and respond to issues in strata properties; and
  • commit to further investigating impacts from STHL on traditional accommodation operators.

The paper is now available for public feedback during a three-month consultation period until 31 October 2017, after which the NSW Government will consider submissions and decide what regulatory approach it will pursue for short-term holiday letting. Although to-date there appears to be general acknowledgement that favours a more liberal approach to STHL.

The intention of the Options Paper, according to the responsible minister, is to consider a range of alternatives to deliver a better and more effective approach, which is currently at local government level and fragmented. However, the minister has commented that rather than proposing a single fixed model, exploring a whole-of-government framework that fully addresses the relevant land use, planning and strata management issues is the intention.

In particular views and comments are being sought on topics that include:

  • Industry self-regulation, including a code of conduct, complaints management, education, monitoring and reporting;
  • Strata regulation, including by-laws managing visitor behaviour, by-laws for compensation for adverse effects and by–laws prohibiting STHL;
  • Planning regulation, including development approval, limit of length of stay and number of days per year, limit by number of bedrooms and regulate by whether host is present;
  • Registration to manage safety and amenity issues.

This is a very logical approach as STHL in an area like the CBD of Sydney are very different to more remote areas or a holiday and tourist location, and it is good to look at how this might then apply to a single home or an investment apartment in a strata complex. Airbnb listings and locations are very diverse and can range from $25-$200 plus per night in very different areas, making a single set of rules hard to justify.

Current Rules

Currently in NSW, regulation is ad hoc and some local councils require planning approval while others do not and we see different rules in other states.

In June, South Australia became the first state to get rid of development approvals while Victoria and Queensland do not have specific laws about Airbnb hosting and in Queensland, many strata buildings oppose STHL.

The NSW government’s position (in favour of Airbnb) puts Sydney at odds with other global cities, which are increasingly cracking down on entire home rentals on Airbnb because it reduces availability of rental housing stocks. Here again we see a difference of view between the City Council and the State Government.

Airbnb also takes another view and recently commented that income from Airbnb was in fact helping some homeowners meet their mortgage payments as well as other cost of living expenses.

In Victoria landlords including apartment owners can rent on Airbnb, but tenants cannot sublet, which under most tenancy leases is a general rule anywhere. In Western Australia a DA is required and any breach can attract a $200,000 fine. In Tasmania there’s a mixed bag of rules, with up to 4-rooms in a home being free of any permits, but investment properties will need registration with local councils.

However we are far from alone in this debate and many international cities have varied rules as they wrestle with the same issues.

In London for example the rental of an entire home is limited to 90 days, is less at 60 days in Amsterdam, in Paris its 120 but for investment properties it is banned unless registered as a commercial property.

In New York in multi-unit buildings there’s a 30 day limit, and in San Francisco there’s a 90 day limit for a primary residence. It’s somewhat disturbing to see controls placed on investment properties.

Are Restrictions Necessary?

The short-term accommodation industry and the community will be part of the broad NSW Government’s consultation process in particular the impact on strata apartment buildings which has become a bit of a hot-button issue.

It is already clear that planning matters and strata laws require detailed options and any possible regulations for short-term holiday letting will require a progressive approach. There is a clear need to fully consider the best environment for permanent residents and visitors.

Airbnb is part of a big shift in service delivery often dubbed the ‘shared-economy’ which is rapidly impacting many services and creating new economic models. The trick in dealing with Airbnb is to establish a model that enables it to continue to flourish and innovate whilst ensuring the amenity and safety of users and the wider community are protected.

It’s a complex issue, but one that I do not think can be managed by blanket bans. We need to find common ground that works well for everyone involved but recognises the right of people to use their private property freely.

There’s a danger that the area could become over-regulated and that’s possibly not going to be fair to property owners, including apartment investors. However properly managed this important part of the economy can grow and there might well be room for innovation and new thinking.

One option suggested for apartments has been a share of income back to strata buildings.

The idea ‘The Friendly Buildings Program’ piloted in the US, could redirect a recommended 5% to 15% of booking fee back to the strata body, and possibly cut strata fees or help manage services.

The program also has Airbnb hosts and their strata body sign an agreement, including a “rule book” for home sharing plus insurance of $1 million for every booking. The policy also dispels the idea that only back-packers or rowdy guests use Airbnb, which is not the reality, clients are a wide demographic.

There needs to be, as already suggested, an entire and detailed framework to address land use and planning issues, and strata management including the important amenity and safety of existing residents, that also respects the rights of investors and guests to access a wide range of accommodation.

Check this link from the The NSW Department of Planning & Environment For more details: http://www.planning.nsw.gov.au/STHL.