A court case brought in the NSW Land and Environment Court last week could threaten thousands of people who rent out their investment properties or holiday homes to short term renters.
What began as a neighbour dispute over noise in the central coast town of Terrigal has grown into a major test case for the right of investment property owners to rent out their homes for short periods such as a week or weekends.
The neighbour complained of loud and drunken parties next door when the six bedroom house was rented out for school holidays and weekends.
The neighbour took the case to the Land and Environment Court arguing the owner of the property should be prohibited from renting it out on a short term basis. He told the court the noise of drunken parties from next door was causing psychological damage to his family.
The case hinges on the definition of "dwelling house" as set out in the residential zoning rules of the local council. The neighbor argues "dwelling" means a degree of permanent occupancy, and argued if it is let out for parties on a regular basis it is in breach of the Environmental Planning Assessment Act and needs approval from the local council.
Michael McHugh of Stacks Business, the lawyer representing the owner of the property, said if noise was the problem then the neighbour should complain to police rather than seek to stop an owner letting out their property.
"We argue a property does not have to have permanent residents to be considered a dwelling house," Mr McHugh said. He said his client bought the property as an investment to let out to holidaymakers, and if she can't do that it would ruin her.
The owner didn't know it was being used for parties, and since the neighbour complained about noise she's asked renters to sign an agreement they won't use the house for noisy parties.
"This case will have enormous ramifications for thousands of property owners up and down the coast who rent out their investment properties or holiday homes for short term stays," said Mr McHugh.
"It's a big industry not just for home owners but also for local tourism."
The case continues and many investment and holiday home owners are watching closely.
In a strange twist, the judge told lawyers for both sides that she also owned a holiday home. The lawyers didn't object to her hearing the case.
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