The NSW government has announced new regulations governing short term letting for online accommodation platforms such as Airbnb and HomeAway (formerly Stayz). With the short term rental market booming, it's important for all parties involved in home sharing to understand their rights.

I've handled many cases which have involved conflict between neighbours and property owners over short term holiday letting. Personally affecting residents and their homes, these disputes can quickly escalate and make life very unpleasant for all involved.

Law governing short term letting to be clarified

The new regulations governing short term letting in NSW will serve to clarify the law, which had been poorly defined prior to the introduction of this regulatory framework.

The Minister for Better Regulation issued a ministerial statement about the new Airbnb laws, saying, "These are the toughest laws in the country and will make sure residents are protected while ensuring that hosts who do the right thing are not penalised."

Different rules to apply to short term rentals outside Sydney

Under the proposed NSW laws, short term letting will be allowable for 365 days a year, as long as the host is present. If the host does not live at the property, short-term letting will be limited to 180 days in Greater Sydney. However, this extends to 365 days for properties elsewhere in NSW.

Councils outside Sydney will have the power to decrease the 365 day limit to as few as 180 days. This is an important step for regional areas, where short term letting practices have significantly reduced the number of properties available for long term rental, particularly along the NSW coast.

Owners corporations may be given power to ban short term letting

In announcing the reforms, the minister acknowledged that the regulation of short term rental accommodation in NSW had been a complex matter, which the government had been tackling for over two years. The minister believes the government now has the balance right, with the new laws protecting residents, hosts and guests, as well as owners corporations.

Changes have been proposed to the NSW Strata Schemes Management Act 2015, to allow owners' corporations to ban short-term letting in their apartment block if they have a 75 per cent majority. This does not apply to people who live in the apartment and rent out a room to a guest.

Code of conduct will apply to all involved in short term letting

Under the new short term letting laws, a mandatory code of conduct will be developed for online platforms, letting agents, hosts and guests to address matters such as noise, anti-social behaviour, disruptive guests and the effect on shared amenities.

The code will include a new dispute resolution process with independent adjudicators to assess complaints. In addition, NSW Fair Trading will have the authority to police online platforms such as Airbnb, as well as the websites of letting agents.

Hosts or guests who commit two serious breaches of the code within two years will be banned for five years and placed on an exclusion register. Businesses that breach the code will face fines of up to $1.1 million, while individuals could face fines of more than $200,000.

Proposed regulatory framework still carries some uncertainty

It's likely there will be some problems with the proposed reforms, which have yet to pass into law. Amendments to the legislation could still be made in parliament. There have already been many opposing arguments made in parliament since the regulatory framework was the subject of a parliamentary committee report in October 2016.

For instance, it could be difficult to determine the authority of the property owners who want to ban short term letting in their apartment block. Also, the "two strikes and you're out" policy could be contentious. Who decides what a "serious" breach is? Is there an appeal process?

In addition, if a regional council wanted to limit short term rentals to 180 days per year, will people have any legal right to challenge this? Similarly, if someone wanted to restrict the practice in their neighbourhood because they believe it will disrupt the community, would they be able to pursue this under the new rules?

Unsure about how the new short term letting laws could affect you?

If you're facing opposition to your short term holiday letting plans, or you're concerned about an Airbnb operating in your apartment block or neighbour's house, it's wise to seek legal advice and gain a full understanding of your rights before taking any action.

Michael McHugh
Planning and environment
Stacks Law Firm

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.