The short-term holiday letting debate (STHL) has done yet another circuit around the ring. This time the NSW gov have done their best to bed the problem down. Only time will tell whether this new piece of legislation will be bland enough, or strict enough, to keep everyone happy.
In essence, this is where we are at:
The Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018 was passed by Parliament on 21st August with only the Greens not supporting it. The bill set up the following codes and guidelines for the HL industry:
- Creation of a new mandatory Code of Conduct for all industry participants, which will include a “two-strikes and you’re out for 5 years” policy
- Allowing short-term holiday letting as exempt development 365 days per year when the host is present
- When the host is not present, a limit for hosts to share properties via short-term holiday letting of 180 days in Greater Sydney, with 365 days allowed in all other areas of New South Wales (local councils will be able to reduce this down to 180 days if they choose)
- Protecting the rights of people living in strata buildings to share their own homes responsibly
- Giving owners corporations the power to adopt a by-law in strata buildings, by special resolution – 75 % vote – to prohibit short-term accommodation for people sharing non-primary places of residence
The 180 Day Rule
Clear as mud right? The main issue is whether Byron Shire, and other Northern Rivers councils, will decide on adopting the 180-day limit rule. Shires outside for the Greater Sydney region have the option to limit HL providers to only 180 days rental a year if they make their own ruling.
Many assumed it was a given that the present green council would implement the half year restriction. But this is not so clear cut. Many, inside the industry and without, are coming around to the opinion that introducing the 189 day rule may be more of a negative and still not deliver the desired outcome. It is seen as providing a worse case scenario and many HL property owners who want to keep properties for themselves for part of the year, will just exit the property pool and keep them empty. This will be a major negative for retail businesses. The idea that these HL properties will go back into the general rental pool, as hoped, is not a given. Even if they do go back into permanent rental, it will not be at affordable rental rates.
No Easy Solution
There is no “fix-all” solution. Byron Bay and some beachside suburbs of Sydney do have a problem. Many other regional areas in NSW support the new DIY rental platforms, with tourists and property owners alike, seeing it as a benefit. Even Byron Shire is not homogenous with this. Brunswick Heads has been holiday destination forever and they see themselves as a different case to Byron Bay. There are houses there that have been holiday let for over 100 years. The culprits are the few HL properties operated by uninvolved and absent landlords who are not taking care. Unfortunately, there is no available legislation to tackle only these individuals.
A crucial negotiating point is whether the HL operators will be included in the idea in process of charging a voluntary bed tax. This is a way of bringing the HL industry in from the cold with the council and allowing them to tick one of the boxes that is a community complaint: “they do not contribute to the coffers and are a burden, not a contributor”. If the 180 day a year plan is implemented and they are not included in the voluntary bed tax plan then they will not be part of the solution and this plan will not work in Byron Shire.
The Granny Flat Dodge
A related, but the slightly different issue, is the Mayor Simon Richardson being quoted saying BSC will be fining illegal holiday let practitioners. This story was not adequately represented in the local media. What Simon is talking about is the specific case of studio and granny flat builders who were exempted from paying council contributions.
Quite a number of these studio builders dodged the approximate $20-25K council contribution. They were given this waiver with the understanding they would be providing much-needed housing for local people. Many of them were able to avoid the council contribution and then proceeded to list their dwelling in the commercial HL market. The council is well entitled to fine these people and more power to their arm.
But this is a different scenario to the wider Short Term Holiday Let issue. So far, legal opinion has come down very clearly on the side of private homeowners (investors and owner occupiers alike) being allowed to holiday let. The new regulation is an attempt to control and moderate this practice without completely killing it. Byron Shire Council and residents should take a step back and see if this new legislation works before introducing anything draconian like the 180-day restriction. The council should also stop beating a drum and playing to the gallery promoting the unverified opinion that Short Term Holiday Letting is illegal.