This article discussing ways in which short term letting is changing in NSW and what you can do about it has been provided by Karen Stiles, Owners Corporation Network (OCN).
The NSW Government has clearly stated its intention to open up all residential dwellings in NSW to holiday letting.
To achieve this, the Government intends using a State Environment Planning Policy (SEPP) to override existing locally based land use controls such as residential zoning and development approvals. Details of the proposed planning arrangements are set out in its ‘Explanation of Intended Effect – Short Term Rental Accommodation’ document issued for comment on 5 October 2018. Public submissions are due by 16 November 2018. More information here: NSW Department of Planning and Environment – Short–term rental accommodation.
The proposed Planning Policy defines ‘short term rental accommodation’ as any consecutive period of less than 3 months. Once issued, the Policy would establish short term rental accommodation as an ‘exempt development in any NSW dwelling, except for a dwelling in bush fire prone land where it would be a ‘complying development’.
The essential land use planning assumption is that short term letting has a very minor impact on residential living.
Clearly, this is not true in residential strata schemes where short term letting is operating on any scale compared to the number of available lots. Even as few as two apartments being short term let to holidaymakers in an eight-lot scheme can change the character of the block and result in serious problems for residents.
Already many strata residents, particularly in schemes close to the beach, the city centre and popular urban locations, have experienced a reduction in the quality of their home life, sense of community, as well as increased noise, security and safety concerns, and wear and tear on common property leading to higher levies. It is for these reasons that current land use planning instruments clearly distinguish between ‘tourist and visitor accommodation’ use and ‘residential’ use. This is also why the Land and Environment Court has found holiday and tourism activities fundamentally incompatible with residential living.
The NSW Government has proposed some mechanisms to limit the impact of short term letting but these will not be enough to protect many strata residents.
In the greater Sydney area, short term letting of investment properties is supposed to be limited to 180 days per year. No such daily limit applies elsewhere. There is also no limit on the use of a primary home, which may also be vacated for ‘un-hosted’ short term lets. There is an express right for strata schemes to prohibit investors from short term letting via a by-law, provided it is passed by 75% of owners at a General Meeting.
In addition, a Code of Conduct is being developed to help regulate participants in the short term letting industry. However, this Code is likely to confine itself to behavioural issues like noise, nuisance and intentional damage to common property. The complaint process is expected to be run by a Code Board, although funding and powers of this Board are not yet known.
As yet, no draft of the Code of Conduct has been released for public consultation, but we do know that, despite requests by Local Councils and OCN for a public register, there is no intention by government to require owners or tenants to register their premises when used for short term letting.
Local Councils will not know which premises are used for this purpose, when letting commenced or whether regulatory standards, including fire safety, are being met. The enforcement of the 180 days per year limit is a major issue given the clear financial incentive for investors to ‘game’ this requirement. Profitability of holiday letting is critically linked to maximising the amount of time a property is being let.
Strata residents are entitled to be concerned about these changes, particularly if the strata scheme is in an area attractive to tourists. The potential for your peaceful home life to be disrupted and your property to be devalued over time is very real.
The Owners Corporation Network (OCN), as the peak body for residential strata owners and residents, has prepared a detailed submission seeking major changes to the proposal. These include requiring better information dissemination by Government about the proposals and extending the periods available for consultation. OCN is also working on suitable ‘pro-forma’ by-laws consistent with the new legislation for possible use by its members.
What can you do?
Please alert other residential strata owners to the risks facing them from the proposed regime. It is apparent that many schemes are oblivious to these risks. Without raising awareness and understanding there is little prospect of creating media or political action.
You can also contact your State Member of Parliament and/or lodge your own submission to Government consultations on this matter (comments on the current consultation close 16/11/18). Such actions help make it clear that strata owners care and want to be treated properly.
Wherever possible, by-laws need to be enacted at a properly convened General Meeting of owners prohibiting short term rental accommodation being undertaken by off-site owners. It should be noted that, under the new legislation, it is unlikely that by-laws prohibiting people from short term letting their principal place of residence would be legally enforceable.
OCN has good people working on these issues on a voluntary basis as well as a limited fighting fund donated by concerned strata schemes. Further assistance and funding would be most helpful.
Importantly, there is strength in numbers and becoming a member of OCN helps show Government that strata owners care about the issues affecting them.
- Strata & Airbnb: How to stop Airbnb in your building
- NSW: How will the proposed Airbnb changes affect me?
This post appears in Strata News #217.