Short-Term Letting – What You Can Do

There has been a lot of discussion in the industry regarding short-term letting, and much of this discussion can leave one feeling more confused than ever.  Here we clarify the facts and provide some detail around how an owners corporation can address short-term letting in a strata scheme.

What you need to know

  • In June 2018, the NSW Government introduced legislation to regulate short-term rental accommodation. The intention is to introduce a code of conduct, along with a change to the Strata Schemes Management Act 2015 (the Act) enabling owners corporation’s to create by-laws regulating short-term rental accommodation in their strata schemes.
  • The purpose of the code of conduct is to:
    • Set out the rights and obligations of short-term rental accommodation industry participants – guests, hosts, agents and booking platforms;
    • Provide an avenue for disputes and complaints to be heard;
    • Outline compliance and enforcement approaches that will apply for those who breach the code of conduct;
    • Generally facilitate oversight of the short-term letting industry.
  • The change to the Act enables owners corporation’s to adopt by-laws allowing short term letting, but only where it is the hosts principal place of residence.
  • The code of conduct was to be enacted in April 2020, but due to the COVID-19 pandemic it has been placed on hold.
  • The changes to the Act enabling by-laws to be adopted regulating short-term letting have become enforceable as of 10 April 2020.
  • For information on the origins of the new legislation, you can check out the parliamentary readings here.

What can the new by-law regulate?

Strata schemes can now adopt a by-law that will prohibit an apartment from being used for short-term letting, unless the host resides there as their principal place of residence.

It is uncertain whether the host has to be present during the stay; the general position on this seems to be that the host does not need to be present but it is something to keep an eye on when the first tribunal cases inevitably start to be heard.

Here are some things our owners corporations have been considering when drafting short-term letting by-laws:

What constitutes proof that it is the hosts primary place of residence?

The by-law could specify what forms of proof are acceptable bearing in mind some are easily changed on demand (eg. bank statements).

How can you “punish” those who continue to disregard the by-law?

It can be difficult for an owners corporation to enforce the by-laws without tribunal assistance. There will always be those who choose to disregard the rules. There are some practical but legally contentious alternatives that schemes adopt such as imposing fines or deactivating access devices. These methods are very effective, but the owners corporation need to be aware of and accept the risks involved first.

Should there be a registration process?

Some schemes have a check-in procedure. This is generally in buildings where there is a concierge or on-site staff. Consider the costs involved and whether hosts might need to pay these.

Will this gain traction or will you have to combat objectors?

Many large schemes might experience issues with property agents who operate short-term letting services across a number of apartments in the building and hold proxies. It is important to have conversations with other owners in the building, and consider strategically how to approach the issue.

Should you adopt the code of conduct?

Though not yet enforceable, there are provisions within the code of conduct that may be useful to strata schemes. Some of our owners corporations are including provision that the code of conduct (when in force) must be complied with. This enables them to plan ahead and make sure that the code can be enforced at a strata level as well as by NSW Fair Trading.

More Information

If you think this type of by-law might be useful in your scheme to protect your asset, chat with your strata manager about how to implement it.

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