This article is about prohibiting short term letting in NSW strata schemes.
From 10 April 2020, owners corporations were able to rely on by-laws that prohibit short-term letting. As always, however, the devil is in the details.
When trying to regulate short-term letting, the first point that owners corporations and owners should be aware of is that a by-law can only prohibit short term letting where the lot is not the principal place of residence of the person who is providing the accommodation.
This brings up two related sub-issues:
- While principal place of residence has not been defined the principal place of residence exemption ruling no. LT 082v5 under the Land Tax Act 1956 assists. The ruling states: “[t]he term “principal place of residence” means the one place of residence of a person, whether within or outside Australia, that is the principal place of residence of that person. “ This means that a person may only claim one place of residence as their principal place of residence and, if they provide short-term letting out of more than one lot in the scheme then a by-law can prevent short term letting of the non-residence lot or lots; and
- Can a corporation claim a lot as its principal place of residence?
The second point of note is that short term letting is now defined in the Strata Schemes Management Act 2015 and the Fair Trading Act 1987 as a “short-term rental accommodation arrangement”. In defining short-term letting, the Acts create further limitations. A short-short term rental accommodation arrangement:
- must be a commercial arrangement – in other words, consideration (usually money) must change hands. Letting a “friend” house sit at no cost while the occupants are away or a simple unit swop for a short period would likely not be a commercial arrangement; and
- is an arrangement of less than 3 months occupation at any one time.
The definition is at s54A of the Fair Trading Act 1987 and we have extracted it in full below for those who are interested.
The good news is that if there is a by-law prohibiting short-term rental accommodation arrangements and the occupant is not claiming the lot as their principal place of residence and the arrangement is commercial and allows occupation of less than three months then NCAT action can be taken to prevent this use. The devil is that owners corporations will need to have evidence of the use and that the lot owner / occupant does not use the lot as their principle place of residence and the scheme has a by-law prohibiting short term letting.
The second piece of good news is that the Code of Conduct and the supporting regulations (mostly) came into effect on 18 December 2020. An article on what is required by the host, guests and booking platforms under the Code is here: Code of Conduct for Short- Term Rental Accommodation. This means that it will likely be more effective from later this year to make a complaint under the Code of Conduct for serial offenders.
“short-term rental accommodation arrangement” means 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, and includes any arrangement prescribed by the regulations to be a short-term rental accommodation arrangement, but does not include any arrangement prescribed by the regulations not to be a short-term rental accommodation arrangement”
section 54A Fair Trading Act 1987 (NSW)
Please note: This is not intended to be legal advice. You should seek legal advice specific to your situation.
This post appears in Strata News #459.
Have a question about prohibiting short term letting in NSW strata schemes or something to add to the article? Leave a comment below.
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- NSW Fair Trading: Changes to short-term rental accommodation
This article has been republished with permission from the author and first appeared on the Thoughts from a strata lawyer website.
Looking for strata information concerning your state? For state-specific strata information, take a look here.
Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.