Can Your Extension or Addition Be Used as an AirBnB?

Regulations for short term holiday letting

In November, the Mayor of NSW’s Byron Shire, Cr Simon Richardson, made State news when announcing that residents could be fined up to $10,000 if found to be illegally holiday letting.

This was in response to a housing crisis in the Byron community, mainly caused by the amount of housing stock now being diverted to use as short term rentals via providers like AirBnB.

Forthcoming State Changes

Whilst the Sydney market is very different to Byron, changes are being considered at the State Government level that may affect both regions.

Cr Richardson probably had in mind this review when, in the same interview, he suggested that the State Government should let communities respond to short term holiday lettings according to their individual needs.

The state’s response has been a lengthy process: a 2016 inquiry by the NSW Legislative Assembly Committee on Environment and Planning first looked at the regulation of short term holiday letting in NSW and published its final report in October 2016.

Key Report Recommendations

The Committee made 12 recommendations including one that proposed further consultation with the industry (including ‘traditional’ accommodation operators like hotels) as well as the community.

Other recommendations included:

  • Amending planning laws to regulate short-term rental accommodation;
  • Allowing empty houses to be let as exempt and complying development;
  • Strengthening the powers of owners’ corporations to manage issues in strata properties.

July 2017 Options Paper

In July 2017 the NSW Government invited community and industry feedback on their Options Paper for short-term holiday letting in NSW, a publication based on the Committee’s report.

Responses to this paper were due by 31st October 2017 and are now under consideration.

As Cr Richardson also noted, the wait for the State Government to resolve the outstanding issues puts local councils in a difficult dilemma: until they know the final state government response (and then for legislation to potentially be passed), local councils are unable to confidently move forward knowing that changes at the State level may affect their chosen path.

Current Local Council Regulation

Currently, some NSW local councils, like Byron Shire, regulate short term holiday letting via the planning system.

Yet even if councils do have regulations, they tend to use different definitions for when short term holiday letting requires development consent. The options tend to be one of:

  • Allowing it without the need for any approval;
  • Defining it as tourist and visitor accommodation within residential accommodation and set a maximum number of consecutive days that a letting can occur;
  • Defining a maximum number of bedrooms allowed; and
  • Defining thresholds for days and bedrooms. If exceeded, approval may be required.

And within these options different settings may be applied by different councils.

Options for Homeowners

Some of our clients have built an extension or addition with the short term holiday rental market in mind. Whilst we leave it to them to work out the pros and cons to letting out a room or section of your home via AirBnB, for some the financial rewards make it a serious consideration.

However, until the state government completes this review process and some certainty is created, the current patchwork of regulation means that homeowners should check their local councils regulations and, in the case of using recent alterations to their home, they should check their development application (if one was required) as well as their councils overall regulations.

Whilst similar crackdowns to the one announced by Byron Shire may not be pursued by your local council, this is a fluid situation and other councils will be watching the Byron example with interest.

And given the comments of Cr Richardson, even with State regulation imminent, it remains possible that local councils will retain some autonomy within the new rules when they arrive.

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