New rules now in force for short-term rental accommodation

The State-wide approach to regulation of short-term rental accommodation has come into force

With pandemic-related international travel restrictions lingering on, the domestic tourism sector is expected to enjoy a bumper season this summertime.

Due to this, interested parties should be aware of there being new, State-wide rules regulating ‘short-term rental accommodation’ (STRA) that have come into force this month (November 2021).

Whether you are:

• a property owner looking to capitalise on the “share economy” by offering a residential property for short-term rent through a booking website

• a resident residing near such a property and impacted by noisy visitors

• a council having to deal with associated complaints

you will need to know of the new rules and apply them accordingly.

Previously, such types of private property holiday letting were regulated at a local level, regulated by the local council (at least those who had chosen to do so) under the local environmental plan.

However, in April of this year the NSW Government announced a new State-wide policy approach to the regulation of STRA. The new rules were set out in the State Environmental Planning Policy (Affordable Rental Housing) Amendment (Short-term Rental Accommodation) 2021, which amends the existing State Environmental Planning Policy (Affordable Rental Housing) 2009 (SEPP ARH).

Those new rules came into force on 1 November 2021, just in time for the summer season.

Having received enquiries on the changes from stakeholders such as those mentioned above, we provide the following as a reminder of the changes.

The New Rules

STRA is formally defined as a dwelling used by the host to provide accommodation in the dwelling on a commercial basis for a temporary or short-term period.

NOTE: The host is the owner, tenant or permanent resident of a dwelling, who uses the dwelling as STRA.

There are two types of STRA:

• hosted short-term rental accommodation – where the host lives in the dwelling, remaining in residence while part of it is provided to paying guests

• non-hosted short-term rental accommodation – where the host does not reside in the dwelling, which is provided as a whole to paying guests.

Pursuant to the new clause 51E of the SEPP ARH, the use of a dwelling as STRA is ‘exempt development’ (meaning no prior approvals are needed) if:

• the dwelling was lawfully constructed as residential accommodation

• the dwelling is not, or part of, a boarding house, group home, hostel, rural workers’ dwelling or seniors housing

• the dwelling is, or is part of, a type of dwelling that is permitted (either with or without development consent) on the subject land

• the dwelling is registered with the Planning Secretary (see below)

• the dwelling is not, or is not part of, a refuge or crisis accommodation provided by a public or local authority (including the Department of Communities and Justice, the New South Wales Land and Housing Corporation or the Aboriginal Housing Office) or any other body funded wholly or partly by the Commonwealth or the State

• the dwelling is a class 1b or class 2-9 building under the Building Code of Australia, and must have a current fire safety certificate or fire safety statement, or have no fire safety measures currently implemented, required or proposed (see below)

• the use of the dwelling as STRA must otherwise be lawful (for example there cannot be any by-laws, conditions of lease or conditions of development consent that prohibit such use)

• the dwelling is not a ‘moveable dwelling’ as defined under the Local Government Act 1993.

In addition to the above, non-hosted STRA in the following areas can only be used as STRA for a total of 180 days in any 365-day period (but from which stays of over 21 consecutive days by the same person/s are excluded):

• Greater Sydney Region (excluding the Central Coast local government area)

• Ballina local government area

• Byron local government area

• certain land in the Clarence Valley local government area

• certain land in the Muswellbrook local government area.

If any of the above requirements cannot be satisfied, the STRA will not be ‘exempt development’ and development consent will be needed before the property is used as STRA.

Property owners and councils are also reminded of related changes made to the Environmental Planning and Assessment Regulation 2000 for:

• the maintenance of minimum fire safety standards for STRA (pursuant to new clause 186W)

• the compulsory annual registration of STRA with the Planning Secretary (pursuant to clause 186X).

The minimum fire safety standards can be found here.

Implications of the New Rules

The main change that results from the new rules when compared with the common local rules is that a wider number and range of dwellings will be usable for use as STRA without the need for development consent. This is due to:

• the land-use zone limitations that were common in local rules no longer apply

• the limitations on use of dwellings based on a maximum number of bedrooms (often dwellings with more than 4 bedrooms were excluded) that were also common in local rules no longer apply.

Related Codes

NSW Fair Trading has provided a Code of Conduct for the operation of STRA.

The Code of Conduct sets out the rights and obligations of both hosts and guests of STRA, particularly in the event of a dispute.

The Code of Conduct can be accessed here.

Please contact Steven Griffiths of our Property, Planning and Construction Group for further information on this topic or any other environment and planning, property and local government law matters.

Author: Steven Griffiths