New Draft Framework for Short-Term Rental Accommodation in NSW

Tuesday 27 August 2019 @ 9.58 a.m. | Legal Research

On 14 August 2019, the NSW Department of Planning, Industry and Environment and Department of Customer Service released a discussion paper regarding a new regulatory framework for short-term rental accommodation (“STRA”).

The following documents accompanied the release of the discussion paper:

  • The draft State Environmental Planning Policy (Short-term Rental Accommodation) 2019 (NSW) (“the draft Environmental Policy”)
  • The draft Code of Conduct for the Short-term Rental Accommodation Industry (“the draft Code”)
  • The draft Fair Trading Amendment (Code of Conduct for Short-term Rental Accommodation Industry) Regulation 2019 (NSW) (“the draft Fair Trading Regulation”)
  • The draft Environmental Planning and Assessment (Short-term Rental Accommodation) Regulation 2019 (NSW) (“the draft Environmental Regulation”)
  • The Short-term Rental Accommodation Fire Safety Standard (“the Fire Safety Standard”)

In 2016, the STRA industry in NSW was estimated to be worth approximately $15.65 billion.  The Government notes in the discussion paper that whilst this industry created jobs, provided additional income for property owners, and overall provided benefits to the economy; problems arose due to lack of regulation within the industry. In June 2018, the Government announced that it would reform regulation in the industry with a state-wide planning instrument, mandatory Code of Conduct and supporting regulations. Currently, the industry is regulated differently across various local areas, creating uncertainty.

The new framework is intended to operate as a cohesive integrated system comprising of several key components. These include:

  • The planning instruments (including the draft Environmental Policy, the draft Environmental Regulation and the Fire Safety Standard)
  • The draft Code of Conduct (and supporting the draft Fair Trading Regulation)
  • The proposed Registration system

The Draft Planning Instruments

The draft Environmental Policy introduces exempt and complying development procedures for STRA, clarifying day thresholds and other key criteria. This draft policy also provides for new definitions, clarifying the difference between hosted and un-hosted accommodations and further distinguishing the types of residential places where STRA is allowed.

The draft Environmental Regulation and accompanying Fire Safety Standard introduces new mandatory safety requirements for places used for STRA, further categorised by dwelling type.

The Draft Code of Conduct

The draft Code lists the obligations of industry participants and provides for a mechanism for processes and enforcement in order to manage and respond to breaches.

It defines key terms in the industry, such as "booking platform", "letting agent", "host" and "guest", ensuring consistency with the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW). Part 5 of the draft Code also sets out the obligations of the industry, including the general obligations of all participants to act honestly and in good faith and comply with the Commissioner’s requests and directions. It also expands on specific obligations such as a host’s obligation to represent their STRA property accurately, a guest’s obligation to take reasonable care of the premises and the booking platform’s obligation to keep accurate records of STRA arrangement transactions.

Additionally, the draft Code proposes the operation of an exclusion register. A host or guest who is listed in this register will not be permitted to participate in the industry for the duration of their listing, a period of five years. Hosts may also be listed in reference to a specific property, where they will not be permitted to rent out that specific premise for the time they are listed in the exclusion register. A host or guest will be recorded onto the register where they have received two strikes within a period of two years. The strikes may be recorded where a guest failed to comply with an obligation to a neighbour, a host misrepresented the state of the premises, a serious contravention of the draft Code or where the Commissioner is satisfied that a strike is appropriate.

The draft Code also covers:

  • Complaints to the Commissioner about contraventions to the draft Code and the procedure for handling these complaints
  • Ensuing disciplinary action for contraventions of the draft Code
  • The procedure to appeal to the Secretary of the Department of Customer Service (“the Secretary”) for review of a Commissioner decision

The accompanying draft Fair Trading Regulation is required in order to give effect to the draft Code and contains additional information to support its operation. These regulations:

  • Prescribe classes of STRA industry participants
  • Determine the participants that are excluded from the operation of the draft Code
  • Sets out the appeals procedure against a listing on the exclusion register
  • Provides for cost recovery fees for the Secretary

The Proposed Registration System

As part of the new STRA framework, the Government is also proposing the introduction of a mandatory registration system. The register is intended to support the regulatory framework through the consolidation of data on all STRA properties, and therefore strengthen responses against complaints and non-compliance to the draft Code.

The register will likely hold the following information:

  • The name and contact details of the host
  • The street address of the STRA property
  • The number of days booked
  • Compliance to by-laws (where applicable)
  • Records of breaches, penalties or strikes
  • Confirmation that the property is not listen on the exclusion register

Consultation Questions

Some of the questions posed for consultation from the discussion paper include:

“5. What types of STRA information will be useful for the Secretary to collect to inform the further improvement of the Code and the STRA regulatory framework? Why?

9. What are potential ways to facilitate industry participants’ access to the exclusion register while limiting potential privacy impacts? What factors should be considered?

17. Which industry participants should contribute to the cost of administering and enforcing the Code? Why?

20. How can industry be organised to develop and manage the registration system?

27. What information should the register collect? Why?

30. Should any information on the register be made publicly available? If so, what information could be made available and why?”

Consultation on the discussion paper and draft instruments is currently open. Further details on the consultation and progress can be found on the NSW Department of Planning, Industry and Environment and Department of Customer Service website.

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Draft Environmental Planning and Assessment (Short-term Rental Accommodation) Regulation 2019 (NSW) and discussion paper available from TimeBase’s LawOne Service

Draft Fair Trading Amendment (Code of Conduct for Short-term Rental Accommodation Industry) Regulation 2019 (NSW) and discussion paper available from TimeBase’s LawOne Service

Draft State Environmental Planning Policy (Short-term Rental Accommodation) 2019 (NSW) and discussion paper available from TimeBase’s LawOne Service

Media Release: Short-term rental accommodation (NSW Government, 14 August 2019).

Have your say on short-term-rental accommodation reforms (NSW Department of Planning, Industry and Environment, 14 August 2019).

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