Strata units and short term rentals – the AirBnB Bill

30 Jul Strata units and short term rentals – the AirBnB Bill

In response to the criticisms of the restrictions imposed by the Strata Schemes Management Act 2015, (‘The Act’) the NSW Government has introduced the Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018 (‘the Bill’). Its purpose is to amend the Act to allow the by-laws for a strata scheme to prohibit short-term rental accommodation if the premises are not the principal place of residence of the individual living the right to occupy.

The amendment specifically focuses on section 139 of the Act, which currently prohibits an Owners’ Corporation from implementing by-laws that:

1. Are unjust, harsh, unconscionable or oppressive;
2. Prohibit or restrict the transfer of a lot or the transfer, lease, mortgage or other dealing relating to a lot;
3. Restrict children occupying the lot; and
4. Prevent the keeping of assistance animals.

The Bill provides that the Owner’s Corporation may prohibit a lot being used for the purposes of a short-term rental accommodation arrangement if the lot is not the principal place of residence of the person giving the short term right of occupancy, up to 180 days. The Bill also proposes that a by-law cannot prevent the lot being used for the purposes of short-term rental accommodation if the lot is the principal place of residence of the person giving the right of occupation.

The approach adopted by the Bill will ensure that lot owners can let out their properties when they are on holidays or when they are sharing their home. Absentee landlords however can only let their properties on a short-term basis for a period of not more than 3 months at any one time.

Short-term rental accommodation arrangement is defined in s 54A of the Bill as “giving a person the right to occupy residential premises for a period of not more than 3 months at any one time”. This is enforced through a code of conduct, which sets out the rights and obligations of short-term rental accommodation industry participants, examined in s 54B of the Bill. A key feature of this code is the implementation of the “two strikes and you’re out” rule – hosts or guests who commit two serious breaches of the code within two years will be banned from short-term holiday letting for five years.

The process for adopting by-laws by special resolution will apply – a 75 per cent vote in favour of the by-law at a meeting of the owners’ corporation will be required.  The bill was introduced into the Legislative Council on Wednesday 20 June 2018.

If you require any further information please contact Alexandra Tzavellas Email: atzavellas@harrisco.com.au