After months of speculation, the NSW Government has released the Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018 (Airbnb Reform Package), in an attempt to regulate short-term letting through online platforms such as Airbnb.
Clarity for owners corporations
One of the key elements of the Airbnb Reform Package is to clarify whether an owners corporation can impose a by-law which prevents short-term letting.
Section 139 of the Strata Scheme Management Act NSW 2015 (SSMA) restricts the type of by-laws that can be adopted by an Owners Corporation. As a result of section 139, a by-law cannot:
While a number of owners corporations have adopted by-laws that prohibit or restrict short term letting, legal commentators, including the NSW Civil and Administrative Tribunal, have disputed their enforceability on the basis that they may be seen to contravene section 139 as:
This position became less clear in recent months given the decisions of Byrne v The Owners of Ceresa River Apartments Strata Plan 55597  WASCA 104 by the Court of Appeal in Western Australia and O’Connor (Senior) and others v The Proprietors, Strata Plan No 51  UKPC 45 by the Privy Council in the UK. These cases, which considered legislation very similar to section 139 of the SSMA, determined that an owners corporation could create a by-law which prohibited short term lettings of less than one month.
In an attempt to clarify the legal position, the Government has introduced, as part of the Airbnb Reform Package, amendments to the SSMA which:
The Airbnb Reform Package defines ‘short term rental accommodation’ as a commercial arrangement which gives a person the right to occupy part or all of a residential premises for a period of less than three months.
The usual process for adopting by-laws by special resolution will still apply. That means a 75 per cent vote in support of the by-law at a general meeting of the owners corporation will be required.
Given that the proposed amendments do not amend section 139 of the SSMA, but simply provide an owners corporation the right to pass a by-law restricting short-term letting in certain circumstances, it is unclear whether a developer will have the ability to include restrictions in relation to short-term letting in its developer by-laws.
It is also unclear where owners corporations, who have already adopted by-laws restricting short term letting where those by-laws do not strictly comply with the terms of the new amendments to the SSMA, will stand. Arguably, these by-laws should be read down to the extent they are inconsistent with the new regime, however the NSW Government is yet to address this point.
Importantly, the Airbnb Reform Package will not stop owners corporations from introducing other measures that will govern how short-term rentals will work within their strata schemes. For example, by-laws can still be adopted requiring lot owners to notify the owners corporation at least 21 days before the change of use of a lot. By‑laws can also be adopted restricting the occupancy of bedrooms in a lot to no more than two adults. These types of by-laws may assist owners corporation in controlling overcrowding related to short-term letting and managing the process generally.
Mandatory code of conduct and complaints system
The Airbnb Reform Package will also introduce:
New state-wide planning rules
The NSW Government has also announced proposals for a new statewide planning instrument which will:
At this stage, no planning instruments have been released for consultation.
Author: Elly Ashley
Vanya Lozzi, Partner
T: +61 2 8083 0462
Breellen Warry, Partner
T: +61 2 8083 0420
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