Short-term Letting Update

Short-term Letting Update

The Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW) was recently passed by both Houses and assented to. It has introduced a new Section 137A to the strata legislation which states that a by-law may prohibit short-term letting for non owner-occupiers. In other words, a by-law cannot prevent an owner-occupier of lot (where that lot is the owner-occupier’s principal place of residence) from engaging in short-term commercial letting arrangements.

So, generally speaking, an owners corporation is now empowered to prohibit investment properties from being used as AirBnB or other short-term letting arrangements by way of the passing of by-law (which requires a special resolution which is a resolution passed whether not more than 25% of the value of votes cast against is passed at a duly convened meeting of the owners corporation).

For developers, it means that the AirBnBinvestment property prohibition by-law can be registered from the inception of the scheme at the time of the registration of the strata plan (and therefore, without the requirement for a meeting or required support from owners in favour of it being passed).

The legislative reforms are also intended to provide a new regulatory framework for short-term letting including AirBnB. Further amendments to legislation and new planning laws, are yet to be introduced.

The Fair Trading Act 1987 (NSW) has been amended to:

• provide a code of conduct for the short-term rental industry;
• introduce a registration system of properties used for short-term rental accommodation; AND
• enact amendments to the Strata Schemes Management Act 2015 (NSW) to enable Owners Corporation’s to prohibit short-term rental accommodation (in the limited scenario discussed above).

It is anticipated that the industry code of conduct for short-term rental accommodation will likely come into effect in 2019. It will govern all participants in the industry – the host, the guest and the letting agent.

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Please note that this article is provided for information purposes only and is not a substitute for professional legal advice.