Short-term rental accommodation options have changed greatly over the past few years and new laws find a balance for all participants and others affected.
What has changed?
From 10 April 2020, a change to strata laws helps owners corporations to manage short-term rental accommodation in their building.
- Owners corporations are now able to adopt by-laws that limit short-term rental accommodation in their strata scheme, by not allowing it in lots that are not the host’s principal place of residence. This means if someone lives in a strata property as their principal place of residence, they will still be able to rent out their home or rooms while they live there, or temporarily go on holidays.
- Residential tenancy laws have been changed to clarify that from 10 April 2020, short-term rental accommodation arrangements of 3 months or less are not agreements covered by the residential tenancy framework.
Owner and resident obligations
Under strata laws, lot owners and residents, including tenants, must:
- not create a nuisance or hazard, either in their property or on the common property,
- not interfere with the use and enjoyment of other people’s housing or with common areas, and
- comply with their strata scheme’s by-laws.
An owner or resident who rents out their apartment on a short-term basis should take steps to make sure their guests are respectful of other residents. For example, an owner could:
- remind guests not to make too much noise late at night
- make sure that guests do not block resident parking
- ensure guests are not damaging common property
- take steps to ensure guests are disposing of rubbish correctly.
By-laws can now limit short-term rental in strata schemes
From 10 April 2020, owners corporations can adopt by-laws that prohibit short-term rental accommodation in strata schemes - but only where the lot is not the host’s principal place of residence.
This means if someone lives in a strata property as their principal place of residence, they will still be able to rent out their home, or rooms, while they live there or are temporarily away from home.
Any such by-law will need to be adopted by special resolution, with at least 75 per cent of votes supporting the proposal at a general meeting.
Before adopting a new by-law to limit short-term rental accommodation, owners corporations will need to work with owners and residents to manage the transition for any pre-existing rental bookings or guests staying in the building at the time of making the by-law. If not, it is possible that when the by-law starts, a guest could be staying in a lot and the lot owner could be immediately in breach of the by-law.
An option for owners corporations in drafting a by-law could be to allow any existing arrangements at the time of the start of the by-law to be completed. Alternatively, the by-law could state that it comes into force at a future date, to give lot owners and residents time to adjust to the change.
More information about general meetings, special resolutions and how by-laws operate is available on our website.
Owners corporation use of model by-laws
The model by-laws, if adopted, already include options to help owners corporations better manage the impact of short-term rental accommodation in their strata scheme.
The model by-laws require:
- residents wishing to change the use of their lot to provide short-term rental accommodation to notify the owners corporation at least 21 days before the change takes place
- owners or residents not to park or stand any vehicle on common property, or permit a motor vehicle to be parked or stood on common property, except with the owners corporation’s prior written approval or as permitted by an authorised sign
- owners and residents to get rid of garbage using the process set by the owners corporation
- owners, residents and their visitors to be adequately clothed and not to behave in a way that is likely to cause offence or embarrassment to other residents or to any person lawfully using common property
- an owner or resident not to obstruct people’s use of common property.
Owners corporations can also introduce an occupancy limit of two adults per bedroom using a by-law. This could help to manage any overcrowding concerns residents may have because of short-term rental accommodation.
Owners corporations can choose to adopt the model by-laws with or without changes. They can also adopt their own unique by-laws, although there are restrictions on the types of by-laws owners corporations can adopt. For example, an owners corporation cannot adopt a by-law that is unjust or otherwise conflicts with the strata laws.
How to adopt a new by-law
To adopt any new by-law, an owners corporation must:
- approve the by-law by special resolution, and
- register the by-law with NSW Land Registry Services within 6 months of its approval.
A copy of the available model by-laws is available in Schedule 3 of the Strata Schemes Management Regulation 2016.
Resolving disputes and enforcing by-laws
Many disputes can be resolved quickly in the early stages if they are discussed openly. Owners, residents and owners corporations should attempt to resolve any concerns about short-term rental accommodation in their strata building with each other directly.
Owners corporations can also set up their own internal dispute resolution process to deal with minor disputes.
Free mediation services are available
Disputes can be mediated using Fair Trading’s free mediation service to try and reach a resolution.
Notice to occupier about by-law breaches
If an owner or resident breaches a by-law, the owners corporation should first contact them to ask them to stop. If the breach continues, the owners corporation can serve a notice requiring the resident to comply with the by-law, if there is a majority vote at a general meeting agreeing that the by-law is being breached.
A notice can be a letter or email and must include the details of the by-law that has allegedly been breached. A ‘Notice to comply with a by-law’ form is available on our website.
An owners corporation can delegate their responsibility for issuing notices to comply to the strata committee or the strata managing agent.
Tribunal can decide by-law breaches
If an owners corporation issues a by-law breach notice and the resident does not stop the identified behaviour, the owners corporation can apply to the NSW Civil and Administrative Tribunal.
If the Tribunal believes there has been a breach of a by-law and the notice was given validly, they can issue a penalty of up to $1,100. If the Tribunal has already fined the owner or resident within the last 12 months for a breach of the same by-law, the penalty imposed by the Tribunal can double to a maximum of $2,200. In this case, the owners corporation does not have to issue another notice to comply before applying to the Tribunal to impose the fine.
What else is changing?
Code of conduct
A Code of Conduct for the Short-Term Rental Accommodation Industry is being finalised. The Code will introduce obligations for hosts, guests, online booking platforms and letting agents, as well as a complaints process for anyone to complain about breaches of the Code.
There will also be changes to the planning laws, including a new state-wide definition of short-term rental accommodation, and new ‘exempt’ and ‘complying’ approval pathways that allow short-term rental accommodation within day limits.
More information about the new planning laws will be placed on the Department of Planning, Industry and Environment website.
Updates will be made to our website as the changes come in.
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- Strata and Community Schemes Updates – for anyone who owns, lives in, or works in strata
- The Letterbox – for tenants, landlords and agents
- Property Matters – for property agents
Where can I find more information?
How to pass new by-laws or model by-laws:
- Responsibilities of the owners corporation
- Strata committee
- Meetings of the owners corporation
- By-laws in your strata scheme
Strata scheme by-laws:
- a copy of your scheme's by-laws is kept on the strata roll and you can access them by asking either the Secretary of the owners corporation or your strata managing agent.
- you can also get copies of the by-laws by contacting NSW Land Registry Services.