Australia: Proposed changes to short-term rental accommodation in NSW: what do industry participants need to be aware of?

Last Updated: 4 September 2019
Article by Christine Covington, Arielle Mayer and Jack Matthews

The NSW Department of Planning, Industry and Environment (DPIE) has made available a host of draft documents aimed at introducing a state-wide framework and Code of Conduct for short-term rental accommodation (STRA). Along with the draft documents, a Discussion Paper outlining the proposed changes has been released for public comment and feedback.

The draft documents and full Discussion Paper can be accessed on the DPIE's website here, with public exhibition open until 11 September 2019. The proposed changes and new framework, as identified in the Discussion Paper, are outlined below. The regulatory framework will likely not commence until 2020.

Planning framework

Currently, STRA is subject to different regulations across different local government areas. The proposed framework seeks to provide state-wide consistency, and includes:

  • a new definition for STRA;
  • new 'exempt' and 'complying' approval pathways (depending on whether the host is present, the duration of the booking and whether the site is on bushfire prone or flood control land); and
  • minimum safety and evacuation requirements for dwellings.

Draft instruments

State Environmental Planning Policy (Short-term Rental Accommodation) 2019

The foundation of the proposed new framework is a new State Environmental Planning Policy (SEPP), which is intended to commence with the Code of Conduct, and will:

  • introduce a new definition for STRA and clarify the types of accommodation in which STRA is permitted;
  • repeal existing STRA provisions in local planning instruments;
  • introduce both exempt and complying development pathways for STRA, including limits on the days the activity can take place depending on location and host presence; and
  • allow savings provisions for any development that was exempt development prior to the commencement of the SEPP to continue.

Environmental Planning and Assessment (Short-term Rental Accommodation) Regulation 2019

The DPIE has also released draft Regulations to support the new SEPP. These Regulations will require STRA dwellings to meet new fire safety standards, and make it an offence to use a dwelling for the purpose of STRA unless compliance with those standards is achieved.

Fair Trading Amendment (Code of Conduct for Short-term Rental Accommodation Industry) Regulation 2019

In addition, the DPIE has proposed new Regulations under the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 to give effect to the STRA Code of Conduct and support the Code with elements such as penalty unit amounts.

Code of Conduct

The Fair Trading Amendment (Short-term Rental Accommodation) Act 2018, which was passed by NSW Parliament on 14 August 2018 but has yet to commence, provides for a new mandatory Code of Conduct for STRA industry participants, including providers of online booking services, agents, providers and users of STRA.

The DPIE has now released the draft Code for feedback. Its primary objectives are to:

  • establish rights and obligations applying to STRA industry participants;
  • guide the resolution of disputes/complaints regarding the conduct of industry participants;
  • outline compliance and enforcement measures for non-compliance with the Code by STRA industry participants; and
  • facilitate regulatory oversight of the STRA industry.

The obligations for industry participants are set out in Part 5 of the draft Code, and are to:

  • act honestly and in good faith;
  • comply with the Commissioner for Fair Trading's requests to produce information and assist the Commissioner to monitor and develop the regulatory framework for STRA;
  • comply with the Commissioner's directions concerning compliance or enforcement; and
  • not knowingly misrepresent a person's identity to avoid a provision of the Code.

The Code also requires the Commissioner to keep an exclusion register listing hosts and guests of STRA that have contravened the Code, and make that exclusion register publicly available.

Industry-led STRA property register

In addition to the proposed changes outlined above, DPIE is considering and seeking feedback regarding the introduction of a mandatory STRA registration system. This register would be funded and administered by the industry, and would provide information about the way in which STRA is being used, including the number, location, kind of dwelling and duration.

The DPIE considers the register would support the STRA regulatory framework by improving the capacity of the NSW Government to:

  • monitor changes in the STRA industry;
  • respond to complaints;
  • confirm compliance with the Code; and
  • support the exclusion register kept by the Commissioner.

What do STRA industry participants need to be aware of?

STRA industry participants – in particular hosts, platforms and booking agents – will need to prepare for the new STRA regulatory framework by updating websites, terms and conditions, safety standards and possibly insurance, to ensure obligations under the Code and safety standards are upheld.

The NSW Government has indicated it intends to review the STRA regulatory framework 12 months after commencement to ensure the key objectives and expectations are being met.

The proposed framework is intended to ensure STRA, especially dwellings offered on online platforms such as Airbnb, are regulated uniformly within NSW, given that the State is responsible for approximately 50% of the $31.3 billion industry in Australia.

The introduction of the Code, new development approval processes and safety requirements for STRA are intended to ensure the quality and safety of dwellings offered and facilitating oversight of STRA providers. Additionally, the potential introduction of an industry-led property register will shift the onus of data collection onto STRA platforms and operate as a means of administering the new framework and ensuring compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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