7 January 2019

Industry wins in short-term holiday letting reforms

Did you know, back on 6 June 2018, the NSW Parliament tabled the Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018 (the Bill)?

The Bill, assented to on 21 August 2018, will introduce a new regulatory framework to govern the short-term holiday letting industry, and includes many hard-fought-for wins for REINSW.

The framework was developed in response to the growth of the short-term holiday letting industry. It is designed to protect residents from anti-social behaviour while also ensuring communities continue to benefit economically from local tourism.

Review of the short-term holiday letting industry

The recent growth and increasing popularity of online booking services, such as Airbnb and Stayz, has seen the rapid expansion of the short-term holiday letting industry. 

While NSW has benefitted from this type of tourism for many years, the industry has remained largely unregulated. 

In July 2017, the NSW Department of Planning and Environment in conjunction with NSW Fair Trading decided to review this industry, releasing the Short-term Holiday Letting in NSW Options Paper (the Options paper). 

REINSW seized this opportunity to provide feedback on behalf of its members, lodging a submission in response to the Options Paper on 31 October 2017. 

“We were happy to have the opportunity to provide feedback on the short-term holiday letting industry and its impact on real estate professionals, owners and tenants,” says Tim McKibbin, REINSW CEO.

“The growth of the short-term holiday letting industry has been rapid and shows no signs of slowing. However, like many industries impacted and driven by technological disruption, regulation has not kept pace with the evolution and growth of the short-term holiday letting industry. 

“With no standardised regulation, local councils across the State regulated this industry independently and confusion reigned. Unfortunately, strata managers and property managers often bore the brunt of complaints regarding unsavoury guests, so reform in this industry was necessary.”

REINSW lobbying for better regulation

REINSW applauded the NSW Government’s initiative in seeking industry and stakeholder input into the development of a robust framework for the short-term holiday letting industry.

“A robust framework will provide greater clarity and guidance for all stakeholders,” says McKibbin. “It will also ensure the economic benefits of the industry continue while managing the social and
environmental impacts.”

The release of the Bill saw many wins for REINSW members, landlords and tenants. These include:

Owner’s rights | In balancing the interests of stakeholders, REINSW emphasised that owners should have the right to deal with their property in the manner they see fit. As a result, the changes to the Strata Schemes Management Act 2015 (NSW) (which are yet to commence) afford protection to the rights of both industry participants and non-industry participants. 

Protecting short-term letting owners and tenants | It is the Government’s intention for the rights of both owners and tenants to be protected under a code of conduct, which is yet to be established. Section 54B of the Bill will allow for a code of conduct to be included in the Fair Trading Regulation 2012 (NSW), which is a huge win for REINSW. Such a code will set out the rights and obligations of all industry participants as well as providing for the resolution of disputes and complaints. An important win for REINSW is the registers contemplated by the Bill. The code may authorise the establishment of an exclusion register of participants who have breached the code, prohibiting or restricting them from participating in short-term rental accommodation arrangements. The code may also provide for the registration of premises used for these types of arrangements. 

“We fought hard for the registration of residential properties used for short-term holiday letting to be included in the Bill,” says McKibbin. “With this, at least there is a foundation for a regulatory environment in which participants understand the consequences of adverse behaviour. 

REINSW is also lobbying for an owner register and guest register with a process of identification established so that the parties to the transaction are clearly known. REINSW will continue its lobbying efforts into the new year with the intention of bringing the Government’s attention to the need and importance of such registers in the short-term rental scene. 

Contravention of the code comes with both criminal and civil penalties – the maximum penalty for an offence for a corporation is 1000 penalty units (equivalent to $110,000) and 200 penalty units in any other case (equivalent to $22,000).

Payment of bonds (a loss) | REINSW suggested that a bond be payable by the short-term letting tenant at the time of booking and making payment for their stay. This would provide owners with security in the event of damage to their property caused by the short-term letting tenant. Despite these suggestions, no provisions have been included in the Bill to address the requirement of a bond. 

More change expected

Short-term holiday letting impacts a variety of stakeholders, including owners, tenants, agents, online booking providers, insurers, local councils, neighbours and the wider community. It also affects a range of property types, such as lots in strata schemes and other community-style schemes, and detached dwellings.

McKibbin says these reforms protect the needs, interests and concerns of the majority of stakeholders and represent the differing property types.

“REINSW has been invited to participate in an advisory committee to develop the code of conduct for this industry,” he says. 

“When a lot owner chooses to engage in long-term letting, a series of strict obligations are imposed upon both them and the tenant under the Residential Tenancies Act 2010 (NSW) – and when those obligations are breached, there are consequences. 

“Why should it be any different in the case of short-term holiday letting? Surely lot owners, occupiers and tenants engaging in short-term holiday letting should be similarly bound?”

REINSW continues to work with NSW Government, industry leaders and representatives on this issue.

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