There are plenty of horror stories. Making recent headlines was the couple who returned to their home after a call from their neighbours to find more than $50,000 damage had been caused by their Airbnb tenants - after what police had termed a “drug induced orgy”.
Whilst many people are benefiting from the sharing economy, stakeholders have raised concerns about residential apartment buildings being used for short-term accommodation due to the evident potential for exposure to greater risk.
The rise of the short stay has now appeared in new pockets of NSW, no longer just for coastal, farm stay and the snow. As a result, the news that a bill has been passed in parliament citing a code of conduct for short stay has been welcomed by many. For the rest of the property management community, it’s one to watch. Certainly having legislation passed is evidence of permanency for this type of accommodation - whether it’s an opportunity, many are not sure yet.
The reason for this bill was two fold. In the first instance to provide a Code of Conduct to people using short stay accommodation and secondly to provide clarity on the Strata Schemes Acts for Owners Corporation struggling to unite on this issue.
The new rules are:
- A Strata Scheme may now create a by-law with a 75% majority to prevent a property from being used for short stay, providing it's not the principal place of residence for the owner.
- A Code of Conduct may be created for occupants of short stay accommodation, setting out rules for use, offences and penalties relating to offences.
- A cap is in place for properties in the Greater Sydney, Newcastle and Wollongong of 180 days of short stay accommodation per year.
- Outside of Greater Sydney, the cap decision is with local councils and manager to declare, however the days provided may not be more than 180.
- A register may be established to list hosts and guests who breach the code of conduct, with a two strike rule, thus enforcing a ban for a five year period from using short stay within the Strata Scheme.
The big take outs for me in this bill are the restrictions. A 75% majority feels really high - effectively I think it’s a win for the short stay gang. An interesting spin on this is the owner-occupier who decides to share a room on Airbnb. This appears to be unrestricted. I’m not sure an owners corporation will be able to easily lock that down.
A side note here, it is quite an expense to change a by-law in a Strata Scheme. It requires the employment of a subject knowledge lawyer. Furthermore, many stratas have already been down the track of writing by-laws into their schemes to prevent short stay, which under the amended legislation may not hold if contested... More money on lawyers fees for the strata scheme?
The concept behind 180 days or six months of short stay is to stimulate the economy but not impact the location and I think we will see this tested strongly. Not great news if you’ve purchased a property with your self managed super fund and the lender is interested in the income - or if you were planning to purchase a property with short stay in mind.
Many are questioning the use of the register, how it will be enforced and how you can challenge it. The legislation provides that a court in NSW may hear these matters. Whether NCAT is a court in NSW is currently under review - more to come on this soon.
