New planning regime for the short-term rental accommodation industry

The rise of short-term rental accommodation (STRA) through services such as Airbnb and Stayz has revolutionised the holidaymaking experience in a similar way to Uber revolutionising the short-trip economy. The rise has led to novel legal issues in strata management and planning law as residences and residential complexes, once the preserve of permanent residents, see a rise in short-term residents. A package of new legal requirements seeks to control the status of STRA under planning law and to ensure that fire safety outcomes are achieved and maintained.

A comprehensive planning framework for short-term rentals

On 1 November 2021, the Environmental Planning and Assessment Amendment (Short-term Rental Accommodation) Regulation 2021 (STRA Regulation) and the State Environmental Planning Policy (Affordable Rental Housing) Amendment (Short-term Rental Accommodation) 2021 (STRA SEPP), together the ‘STRA Planning Package’, came into effect. These policies seek to provide a comprehensive planning framework for short-term rentals.

Recognising the reality of STRA as a firm part of the economy, the STRA SEPP states that it aims to:

• support STRA as a contributor to local economies while managing the social and environmental impacts arising from their use
• provide for the safety of users of short-term rental accommodation
• clarify the types of housing that may be used for the purposes of STRA.

The STRA Regulation and STRA SEPP were introduced as part of a wider reform package to the STRA industry. An explanation of the other STRA reforms, including changes to the Strata Schemes Management Act 2015 (NSW) and the STRA Code of Conduct, can be found here.

STRA Regulation: The amendments explained

The STRA Regulation prevents a dwelling from being used for STRA unless it complies with the Short-term Rental Accommodation Fire Safety Standard, as approved by the Planning Secretary. This is a requirement over and above any other applicable fire safety measures.

For Class 1a buildings, it requires, among other things:

• smoke alarms in every corridor or hallway associated with a bedroom, powered from the mains electricity or with a non-removal battery with 10 years of life at a minimum, and for the alarms to be interconnected if there is more than one alarm
• heat alarms in private garages attached to the dwelling but not associated with the dwelling
• the display of evacuation diagrams, with very specific content and placement requirements.

Class 2 buildings and a Class 4 (residential) part of a building are subject to similar requirements, with additional requirements relating to egress doors, portable fire extinguishers and fire blankets.

The STRA Regulation also introduces a requirement to register STRA dwellings on the NSW Planning Portal. Registration is subject to minor registration and annual renewal fees, and failure to comply attracts a maximum penalty of 20 penalty units. In addition, each registration must include a description of how a STRA dwelling complies with the fire safety standard.

STRA SEPP: Exempt development

The new STRA planning policy provides a streamlined exempt development approval pathway that facilitates STRA in existing, lawfully constructed residential accommodation. STRA is an exempt development under two scenarios – ‘hosted’ and ‘non-hosted’ STRAs.

Where the host resides on the premises (i.e. hosted STRA), the development is classified as an exempt development for 365 days of the year. Where the host does not reside on the premises (i.e. non-hosted STRA), the development is also an exempt development. However, the dwelling must not be used for non-hosted STRA for more than 180 days in any 365-day period in any prescribed area. In calculating the number of days (i.e. 180), any period of 21 consecutive days or more of non-hosted STRA provided to the same person(s) is not counted towards the total.

Byron Shire Council is currently excluded from the prescribed areas, and the commencement of these provisions with respect to Byron have been suspended to 31 January 2022. This is because on 10 March 2020, Byron Shire Council lodged a planning proposal seeking to limit non-hosted STRA to 90 days per year in some areas of its local government area due to a housing emergency declared earlier this year.

Like other exempt development categories, the STRA SEPP imposes general requirements for hosted and non-hosted STRA. These are as follows:

• the dwelling must have been lawfully constructed to be used for the purpose of residential accommodation
• the dwelling must be residential accommodation, but cannot be a boarding house, group home, hostel, rural workers’ dwelling or seniors housing, or part of refuge or crisis accommodation provided by a public or local authority
• the type of residential accommodation the dwelling comprises or is part of must be permitted with or without development consent on the land the dwelling is located on
• the dwelling must be registered on the register established under the STRA Regulation (see above)
• if the dwelling is classified as Class 1b or 2-9 under the Building Code of Australia, the dwelling must have a current fire safety certificate or fire safety statement, or have no fire safety measures currently implemented, required or proposed
• the use of the dwelling for the purposes of STRA must otherwise be lawful (it is noted in particular that adjoining owners’ property rights, the applicable common law and other legislative requirements for approvals, licences, permits and authorities still apply)
• the dwelling must not be a moveable dwelling within the meaning of the Local Government Act 1993.

The requirement for dwellings to have been ‘lawfully constructed’ is a potential point of contention that could raise complex issues of existing use rights or other aspects relating to the regulation of development and construction under legislation.

If you have any questions about this article or the new STRA policies, please speak to us or contact us here.

Authors: Thomas Kwok & Drusilla Barsoum

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Thomas Kwok

Drusilla Barsoum

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