Looming deadline is no holiday for short term rental property owners

25 February 2022


Holiday homes without a proper fire safety plan will not be able to accept bookings from March 1 under new regulations.

The Department of Planning, Industry and Environment (DPIE) is standing firm on the deadline which is part of a new state-wide regulatory framework to overhaul the growing sector.

Since 1 November 2021, anyone wishing to lease their property for short term rental accommodation (STRA) must be registered with NSW Fair Trading. A mandatory Code of Conduct for all participants has also been implemented.

The changes also allow facilitators – in addition to letting agents – to provide property management services for such accommodation.

Why the change?

Technology has made it quicker and easier to book short term rental properties online. The economic upside for homeowners and investors is that empty-houses or rooms can be used to generate additional income.

The new code of conduct aims to address concerns of inconsiderate or anti-social behaviour from short-term tenants. It applies to booking platforms, hosts, letting agents and facilitators.

Under the changes, NSW Fair Trading can take disciplinary action such as a monetary penalty or a ‘strike’ against a property, host or guest, for serious breaches.

It may also list non-compliant participants on an Exclusions Register, effectively stopping them from taking future bookings. Owner corporations can now also adopt by-laws restricting types of short-term rental accommodation within its strata scheme.

Not as easy as it sounds

Already some 33,424 properties have joined the STRA register in NSW. The new rules don’t apply to caravans, tents or moveable dwellings.

All dwellings must comply with fire and safety regulations, including the installation of smoke alarms powered by mains electricity or non-removable batteries with a minimum life of 10 years.

“In light of the pandemic and lockdowns, we gave the community an extra four months to give them plenty of time to implement the fire safety standards,” said a spokesperson for the DPIE.

“All registered properties must have a fire safety plan finalised by 1 March 2022, including clear evacuation diagrams, alarms, extinguishers, and emergency contacts.”

REINSW member Rebecca Cribbin, who runs a holiday letting business in the Southern Highlands, supports the changes but believes the timing couldn’t be worse with current delays finding tradespeople due to the pandemic.

She employed a company to carry out fire safety inspections and draw up evacuation diagrams for almost 400 properties last October. After months of negotiating, the company pulled out of the project because logistically the project was too large.

“It is okay if you are a mum and dad operator with an Airbnb but when you look after a lot of properties, like us, it is a very difficult task,” Ms Cribbin said.

“While we had a fair amount of warning, it wasn’t just a simple checklist, and some properties need upgrades. Regulators may have the best of intentions, but they don’t understand the logistics of the implementation of their red tape.”

Some STRA investors have opted to move their property into long-term lease because of upfront and ongoing costs.

Facilitator versus letting agents

Central Coast agent Cathy Baker, from Belle Property Killcare, is concerned inexperienced facilitators with no qualifications have been given equal footing to manage holiday bookings. They are permitted to create listings, rental pricing, guest vetting, check-in services and organising cleaning for up to 20 properties.

But unlike letting agents, facilitators do not need a certificate of registration or licence to operate which she describes as ‘ludicrous’.

“There are so many moving parts to short term leases, and they may not have the competency to deal with the conflict resolutions, the trades and bonds and things like that,” said Ms Baker, who is a committee member on the REINSW residential sales chapter.

“By giving them a different title of ‘facilitator’, they have acknowledged that they are someone different to a managing agent. It is almost like they have allowed the holiday business to be de-regulated.”

Download the new STRA rules and checklist as released by the DPIE.

Checking up on guests

New regulations make it imperative guests need to be suitable tenants. Ms Baker said it can be tricky being selective about who stays, particularly when a landlord wants to generate a maximum taxable income by accepting every booking.

Relying on third party platforms for booking means agents and facilitators have no control over who is coming to stay. To combat this, she suggests the following:

  • Contact guest before they arrive to find out the nature of their stay
  • Limit bookings from people under the age of 24
  • Do your research and check guest rating on booking platforms
  • Emphasise any breaches of rules will mean a loss of bond
  • Meet holidaymakers at the property at the start of their stay
  • Establish best practice for the lease of STRA
  • Keep detailed documentation should a problem arise

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