Sydney has become the latest city to propose a crackdown on Airbnb holiday rentals. It has now joined the growing number of cities around the world regulating short-term holiday letting. After months of speculation, the NSW Government has released the Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018 (Airbnb Reform Package).
The Airbnb Reform Package defines ‘short term rental accommodation’ as a commercial arrangement which gives a person the right to occupy part or all of a residential premises for a period of less than three months. However, the usual process for adopting by-laws by special resolution will still apply. That means a 75 per cent vote in support of the by-law at a general meeting of the Owner’s Corporation will be required which provide an Owner’s Corporation the right to pass a by-law restricting short-term letting in certain circumstances.
The introduction of the reform package aims to clarify whether an Owner’s Corporation can take advantage of a by-law prohibiting short-term letting of a residential property. The reformation will allow an Owner’s Corporation to pass a by-law which prevents an owner of a strata lot to use their property for short term rental accommodation if the lot is not the owner’s principal place of residence.
According to the Airbnb Reform Package, by-laws can still be adopted requiring lot owners to notify the Owner’s Corporation at least 21 days before the change of use of a lot. By‑laws can also be adopted restricting the occupancy of bedrooms in a lot to no more than two adults. These types of by-laws may assist Owner’s Corporation in controlling overcrowding related to short-term letting and managing the process generally.
It is well noted that Airbnb Reform Package will not stop Owner’s Corporations from introducing other measures that will govern how short-term rentals will work within their strata schemes.
Under the new restrictions, owners who do not live in their property will still be able to rent out their unit on Airbnb with a limit of 180 days per year only. Any hosts that breach a new code of practice can be sanctioned by local authorities, which will have the power to police online platforms. Large fines will apply if hosts are repeatedly in breach of a Strata’s by-laws. The government said that the reforms will carry a two-strike policy, which would see hosts or guests who commit two serious breaches of the code within two years banned from using Airbnb and other similar platforms for five years and placed on an exclusion register. In addition, significant penalties for non-compliance with the terms of the code will apply, with online booking platforms and property agents facing civil penalties of up to $1.1m for corporations and $220,000 for individuals.
The reform package will also introduce a mandatory code of conduct and a complaints system which will apply to online platforms such as Airbnb. This includes a mandatory code of conduct ‘two strikes and you’re out’ policy, as well as a complaints system which will be available to neighbors of short-term rental accommodation, strata committees and Owner’s Corporations. Complaints will be assessed by independent adjudicators approved by NSW Fair Trading. If the investigation of a complaint regarding a host or guest finds that they have committed a serious breach of the code more than once over a two-year period, the guest or host will be listed on an exclusion register.
To operate in the state, Airbnb and similar operators will be required to adhere to the said code of conduct and share data with the NSW Government. Companies that breach the code of conduct will face hefty fines of up to $1.1 million.
A serious breach could include any behaviour interfering with “a neighbour’s quiet and peaceful enjoyment of their home”. Banned users would be added to the register to ensure they cannot “platform shop”. If the complaints are specific to a property, that host could still be able to continue letting other properties.
The NSW Government also announced that strata communities would be able to decide whether to ban Airbnb in their buildings or apartment blocks. They will be given the power to block apartments from being used as rentals if 75 percent of strata owners vote against it. However, they will not be able to ban owner-occupiers from renting individual rooms.
The Government has also announced proposals for a new statewide planning instrument which will allow short-term letting as exempt development 365 days per year when the host is present. Moreover, a 180-day cap on properties used for Airbnb-style letting in greater Sydney will be imposed which means it will limit the ability of hosts to rent out their properties to 180 days where the host is not present.