New South Wales introduced changes to shift laws in 2020 to address many of the issues homeowner societies and residents have faced in light of the increasing number of short-term renters. Specifically, an Owners Corporation can now enact statutes (by a 75% majority) to prevent a short stay system from being used as long as a property is not the owner’s primary residence or is only a single room that is used as short-term accommodation
The NSW Code of Conduct – Where Are We Now?
A binding code of conduct for the NSW short-term rental industry came into effect on December 18, 2020 (the code). The Code did not affect rules governing residential leases and other traditional forms of short-term accommodation such as hotels and was aimed solely at commercial agreements that give a tenant the right to live in an apartment for up to three months at a time.
Strata organizations can prohibit short-term rentals if it is the owner’s non-primary residence.
The code was implemented to regulate the industry and set binding minimum standards and requirements for booking platforms, hosts, guests and agents. The Code also establishes dispute resolution and complaint procedures and is generally intended to facilitate oversight of the NSW short stay industry by NSW Fair Trading.
Other planned changes in 2021 include the introduction of a directory for short-term rental apartments and changes to planning laws that will mean uniform regulation of the premises used for short-term rentals across NSW. These concepts have not yet been implemented. Perhaps because of the impact COVID has had on the Airbnb industry, these changes are no longer as urgent as they used to be.
Melbourne is currently less regulated in terms of its short-term rental ecosystem.
The Victorian Experience
The vacation rental / short stay accommodation industry in Victoria is less regulated than NSW. Instead, vacation rental and short-term rental landlords are guided by a code of conduct that outlines their management and maintenance responsibilities. The only government intervention seen so far is the implementation of a complaints mechanism, which is managed by amendments to the Owners Corporations Act 2006 introduced in February 2019.
The changes allow the Victorian Civil and Administrative Tribunal (VCAT) to impose fines, award compensation and prohibit short-term rental of apartments. Owners Corporations are also able to report violations to guests. This additional form of regulation certainly places some accountability on “Airbnb” hosts, something that the hotel industry undoubtedly welcomes.
Victoria Premier, Daniel Andrews
The Owners Corporations and Other Acts Amendment Bill 2019 (VIC) was recently passed but is not yet in force.
Originally, the bill proposed limiting certain contracts for hotel, resort and serviced apartment complexes to three years, as is the case with other service and management contracts related to the Owners Corporations Act 2006 (VIC). After lobbying by the hotel and serviced apartment industry, this proposal to limit the duration of hotel management contracts (among others) was fortunately canceled.
However, the power remains to enact regulations that may affect some management or service contracts for services provided by hotel and resort operators in mixed-use systems.
The effect of regulations on short-term rentals is a moving celebration and has yet to be fully exploited.
Once adopted, regulations may be enacted that prescribe requirements for hotel and resort management contracts that limit the duration of these contracts, increase, limit or set parameters for fees and charges under these contracts, and prohibit or regulate the inclusion of certain conditions in these contracts .
It is difficult to accurately predict the potential impact of the bill on the short stay and hotel industries until regulations are circulated. We will continue to monitor all proposed regulations and provide further updates as the situation becomes clearer.
Duane Keighran is a partner and leader of the Hotels, Tourism & Hospitality practice group and co-leader of the Property & Development group at national law firm Colin Biggers & Paisley. He and his team represent hotel operators, investors and developers across Australia.