Short-term Rental Accommodation: Airbnb and Stayz are Likely to Stay But the Party House is Over

Introduction

Amendments are proposed by the New South Wales Government to a number of environmental planning instruments to permit and regulate short-term rental accommodation of dwellings (STRA).

While the local environmental plans of many regional, coastal local government areas permit STRA in existing dwellings without the need for development consent, the majority of metropolitan Sydney local government areas prohibit STRA in residential zoned areas. This means that the majority of STRA currently on offer within the metropolitan Sydney area are unlawful.

This is about to change following the release on 19 April 2017 of the State Government’s response to the Legislative Assembly Committee on Environment and Planning’s (Committee) Report 1/56 dated October 2016 on the Adequacy of the Regulation of Short-Term Holiday Letting in New South Wales.

The proposed amendments should overcome the lack of uniformity in different local government areas on the lawfulness of STRA, including those offered on online platforms such as Airbnb and Stayz.

STRA as exempt and complying development

The Government has given qualified support to the Committee’s recommendations that the following amendments be made to environmental planning instruments to regulate STRA:

  1. A definition of “short-term rental accommodation” be included in the Standard Instrument-Principal Local Environmental Plan (Standard Instrument LEP), in the tourist and visitor accommodation category;1 and
  2. State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (Codes SEPP) be amended to permit:
    • STRA as exempt development:
      • in any property where the landlord or host is present;2
      • in a principal place of residence;3 and
      • in an empty property, where the development does not exceed applicable impact thresholds;4 and
    • STRA as complying development in an empty property, where the development exceeds applicable impact thresholds.5

The Committee noted that there is no single and consistent definition of STRA within the council LEPs that permit it. However, it did not include in its recommendations a suggested definition of STRA. It is likely that the State Government will address this in any consultation undertaken before implementing any amendments to the Standard Instrument LEP and the Codes SEPP.

The Committee did not specify what the impact thresholds should be, but it did state that there should be flexibility for councils to determine the thresholds and that the thresholds should reflect the lower level of impact of STRA in comparison to other types of tourist and visitor accommodation.6

We expect that in line with the council LEPs that currently permit STRA, the thresholds will include restrictions relating to the maximum number of bedrooms in any dwelling, the maximum number of occupants in any bedroom, the maximum number of days in any 12 month period within which the dwelling can be used for STRA and whether or not the dwelling is located, for example, within a bushfire prone area.

Strata buildings

The State Government supports the Committee’s finding that STRA should not be excluded from strata buildings, nor should owners corporations be granted the power to prohibit STRA. Instead, the Committee recommended that amendments be considered to strata regulations to give owners corporations more power to manage and respond to adverse behaviour resulting from STRA in their buildings.7

The Committee did not address company title apartment buildings. Such apartment buildings often include in their constitution restrictions on residential tenancies and STRA. This is unlikely to be changed as part of any reforms.

Serviced apartments

The Committee noted that some councils deal with STRA as a “serviced apartment”, and it discussed some high profile cases concerning serviced apartments in the Bridgeport building and Maestri Towers in the City of Sydney. However, it did not include in its recommendations that the Standard Instrument LEP definition of “serviced apartment8 may also need to be amended.

In our view, such an amendment is required to include a distinction between serviced apartments and STRA in apartment buildings. Otherwise, there is a risk that STRA in an apartment building will be characterised as a serviced apartment. This could have unintended and limiting consequences for STRA in apartment buildings, particularly where some councils, such as the City of Sydney, have strict development control plan controls relating to serviced apartments such as:

  • serviced apartments must not coexist on the same floor as any residential apartments in any building
  • serviced apartment floors are to be serviced from the street by separate foyers, lift access and circulation.

Party houses

The Committee supported the Queensland approach where councils can designate “party houses” that are able to be used for high impact STRA such as regular parties, bucks nights, hens nights and wedding receptions, and can impose penalties and bans on any form of STRA where there has been repeated non-compliances.9

The State Government has responded that any party house provisions will be considered when considering the new approach to STRA.

Next steps

The Government will issue an options paper for consultation shortly in relation to the proposed land use planning changes.


1.Committee Report, Recommendation 1, pp 2 – 3; Finding 1, pp 14 – 15.
2. Committee Report, Recommendation 2, p 3.
3. Committee Report, Recommendation 3, p 3.
4. Community Report, Recommendation 4, pp 3 – 4.
5. Committee Report, Recommendation 4, pp 3 – 4.
6. Committee Report, paragraph 1.17, p 4.
7. Committee Report, Finding 5, pp 18 – 20.
8. Defined in the Standard Instrument LEP as: “means a building (or part of a building) providing self-contained accommodation to tourists or visitors on a commercial basis and that is regularly serviced or cleaned by the owner or manager of the building or part of the building or the owner’s or manager’s agents”.
9. Committee Report, Recommendation 7, pp 6 – 8.


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