Legal Insights

Proposed Short-term Rental Accommodation Policy in NSW: How will it be enforced?

By Blake Dyer & David Le

• 07 October 2021 • 6 min read
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Earlier this year, the NSW Government announced a new state-wide policy for short-term rental accommodation (STRA), such as those provided through Airbnb and Stayz, targeted at providing consistency in respect of such accommodation across the State. We have published a previous article looking at these changes here.

The purpose of this article is to outline what the requirements are to comply with these new changes that are proposed to come into effect on 1 November 2021, and to have a look at how they will be enforced by councils.

The proposed planning framework

The new framework includes:

  1. the introduction of a new planning policy for short-term rental accommodation in the State Environmental Planning Policy (Affordable Rental Housing) 2009 (Affordable Rental Housing SEPP)
  2. amendments to the Environmental Planning and Assessment Regulation 2000 (EP&A Regulation)

together, the STRA Policy.

How it works – Planning approval

Exempt development approval pathway

For hosted STRA, where the host resides on the premises:

  • development for this purpose is exempt development for 365 days of the year.

For non-hosted STRA, where the host does not reside on the premises:

  • development for this purpose is exempt development but the dwelling must not be used for non-hosted STRA for more than 180 days in any 365 day period in the prescribed area
  • in calculating the number of days for non-hosted STRA, any period of 21 consecutive days or more of non-hosted STRA provided to the same persons is not counted towards the 180 days.

The 180-day cap for non-hosted STRA applies only to the prescribed area, being:

  • the Greater Sydney Region
  • the Ballina area
  • the Bega Valley area
  • the City of Newcastle area
  • the Dubbo Regional area
  • certain land in the Clarence Valley area
  • certain land in the Muswellbrook area.

Both hosted STRA and non-hosted STRA must meet certain general requirements, including:

  • The dwelling must be lawfully constructed to be used for the purpose of residential accommodation
  • The dwelling must not comprise of:
    • a boarding house
    • a group home
    • a hostel
    • a rural workers’ dwelling
    • seniors housing
  • The dwelling must not be, or be part of, refuge or crisis accommodation.

This means that no further planning approval is required for this purpose, so long as these criteria are met.

STRA can be undertaken in lawfully constructed dwellings for the purposes of residential accommodation in every land use zone in which dwellings are allowed. However, dwellings which have existing use rights for a dwelling house but are no longer permitted in a zone are potentially precluded from use as STRA.

Environmental Planning & Assessment Regulation (EP&A Regulation)

Fire Safety Standard

The Government has recognised that guests in STRA experience greater risks than permanent residents in respect of fire safety, owing to their lack of familiarity with the dwelling. The Short-term Rental Accommodation Fire Safety Standard (Fire Safety Standard), which will be implemented through the EP&A Regulation, will address these concerns, and adopt some standards required of shared accommodation under the Building Code of Australia (BCA).

The Fire Safety Standard introduces requirements for different classes of buildings under the BCA, including Class 1a (single dwelling), Class 2 (apartments) and Class 4 (sole dwelling within a building of a non-residential nature) buildings. For example, all dwellings will require:

  • smoke alarms in dwelling floors containing bedrooms, every corridor or hallway associated with a bedroom, and each other storey not containing bedrooms
  • smoke alarms complying with Australian Standard AS 3786 and must be interconnected where there is more than one alarm
  • the making of an Evacuation Plan and the display of evacuation signage.

Class 2 and Class 4 dwellings will require things such as the installation of a fire extinguisher and fire blanket in the kitchen.

The STRA Register

The Short-term Rental Accommodation Register (STRA Register), which is aimed at ensuring compliance with the new Fire Safety Standard, is now live and hosts can register their dwelling before the new STRA Policy comes into effect on 1 November 2021.

What happens if you breach these provisions?

The EP&A Regulation prohibits the use of a dwelling for the purpose of STRA unless it complies with the requirements of the fire safety standard. A fine can be issued for a breach of this provision.

The EP&A Regulation also provides that a person must not provide a dwelling for the purposes of STRA unless the dwelling is on the STRA Register and the registration is in force.

The fact that this definition for non-hosted STRA, being for not more than 180 days in a 365 day period, is not fixed to a calendar year may cause a compliance headache for councils and owners alike. An owner may comply with this requirement over a calendar year, but may breach over some other 365 day period.

For councils, we consider that there will be difficulty in proving that a dwelling has been used for more than 180 days in any 365 day period because this would require some record of use from a third party source. It is likely that a dwelling house will be offered over multiple booking platforms, and may be also be booked directly with the owner of the premises.

In terms of premises that are being used for the purposes of STRA, but are not on the STRA Register, councils may have an increased regulatory burden which may require that a fire safety order be issued that the owner of the premises stop using the premises for the purposes of STRA until the requirements of the Fire Safety Standard have been complied with and the premises have been registered on the STRA Register.

If you need assistance on potential compliance action for STRA, please contact us to discuss.

The exclusion register

There is a code of conduct for guests and host facilitators. Non-compliance with this code can lead to being placed on the ‘exclusion register’.

This ‘exclusion register’ is managed by NSW Fair Trading, and there does not appear to be a link between being placed on their ‘exclusion register’ and the STRA Register at this point in time. However, as this develops, there may be a link between the two registers which would potentially add to the regulatory burden of councils.

Do you want more information on the proposed short-term rental accommodation policy in NSW?

Please contact a member of our NSW Planning and Environment team.

By Blake Dyer & David Le

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