NSW kicks holiday rental regulation into touch
Well, that’s embarrassing. Looks like the NSW government has shelved its plans to regulate short-term rentals for 12 months, until after the next election, due to a backbench revolt.
The proposed rules (or at least, what we think they were going to be) were very mild by the standards of worldwide best practice – 180 day limit on bookings for properties in Greater Sydney, none outside of that, a two-strikes rule to crack down on party houses, and no ability for stratas to control what units in their buildings are used for.
This would all have been for a 12 month trial.
While the proposed legislation was extremely light touch, it seems some ministers were pushing for no booking limits across the state, arguing that because it’s your property you should be able to do whatever you like with it.
To be frank, that seems driven by ideology rather than practicality. Even a brief look at what’s happening overseas is enough to show how wrong that’d be. Look a bit longer and it’d be clear too how weak the proposed legislation is, and how ineffective it would actually be. Here’s why:
- 180 day booking caps – Tried already and while it has had some success it’s expensive to monitor and very easy to work around. The problem is that professional hosts will quickly find the loopholes because there’s so much money to be made. Ask London. Ask New York. Ask Singapore. Ask Paris. These rules are typically full of holes because they’re written by people who don’t understand the industry or technology.
- 180 days is far too long for a booking cap. Any renting out their home for half a year is not doing it while they’re on holiday. There is only one
- The two-strikes policy is good in theory but retroactive, hard to enforce, and only tackles the “party house” problem of short-term rentals. It’s no comfort for anyone living in an apartment building.
These are rules designed to encourage holiday renting in NSW, not control it. They would worse housing affordability and make life hell for many people living in strata buildings. Indeed, it seems much of the opposition was from politicians with many apartment buildings in their electorates. There has been a push from strata lobby groups in the past 6 months around the rules and that appears to have paid off.
NSW is not breaking new ground here. The state is about 1 year behind other global tourist centres in STR popularity (though quickly catching up). Its regulatory approach is about 5 years behind.
Here’s another point that should worry all of us. The NSW government has been looking at this issue since 2015. That’s 3 years to react to a disruption to local communities.
If this proposal had come out in 2015 it’d be worth trying. But in the past 3 years we’ve learned a lot about the impact STRs have on local communities and what regulation works and what doesn’t.
To be blunt, the NSW proposals ignore all of this. It’s like it was created in a vacuum, designed by consensus of opinions instead of practical realities. No licensing system, no availability quotas, no clear strict fines.
Given we have another year of no state-wide legislation, it’s worth considering why we need it at all. Certainly clear rules benefit people looking to rent out their homes, but given the industry is quickly changing and no one is really sure yet what effect short-term rentals will have on tourist areas (though a consensus is starting to form), can the state government really confidently dictate what the rules should be? Why should STR regulation in Orange be the same as Byron Bay, as the proposed rules seemed to mandate?
Allowing local councils to form their own rules would let them adapt faster to changing circumstances, craft laws that suit them best, and allow many approaches to be tried at once.
Someone who owns one home and rents out a room or the entire property while on holiday would have no problem adhering to local rules. Investors who own lots of STR properties though, would find it harder. So would Airbnb, Homeaway, Booking.com and all the other STR platform, who certainly would benefit from standardised rules.
There are advantages to having a state-wide law but also disadvantages. The NSW government should carefully consider whether local councils would create better rules.
