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Laws imposing new obligations on booking platforms, hosts, letting agents and guests started in NSW on 18 December 2020.
What is short-term rental accommodation?
Short-term rental accommodation (STRA) is a long-standing practice in NSW and is commonly associated with holiday letting. It generally involves residential dwellings that may also be used by the owners for their own accommodation.
Changes in technology have seen a rise in online booking services that have contributed to a significant increase in short-term rental accommodation options.
This has seen economic benefits flow to homeowners and communities with empty homes being used to house tourists and visitors. However, this has also led to amenity impacts on residential neighbours due to inconsiderate or anti-social behaviour from some short-term rental occupants.
The Government’s approach to regulating short-term rental is focused on commercial arrangements where a person is given the right to occupy a residential premises for up to three months at a time.
This means existing laws on residential tenancies and other traditional forms of short-term accommodation, such as hotels and motels, remain unchanged.
How NSW short-term rental accommodation is regulated
STRA is regulated through:
- a mandatory Code of Conduct that applies to all participants
- a state-wide planning framework
- a mandatory short-term rental accommodation premises register
- strata scheme by-laws that restrict certain types of short-term rentals.
Code of Conduct
A mandatory Code of Conduct for the Short-term Rental Accommodation Industry (Code) applies to all participants in the STRA industry.
The Code applies minimum standards of behaviour and requirements on all participants.
Read more about the obligations for:
The Code creates new disciplinary actions that NSW Fair Trading can take, including listing non-compliant participants on an Exclusion Register.
Read more about the new disciplinary actions at Short-term Rental Accommodation complaints.
Read more about the Exclusion Register.
Planning laws and premises register
Changes to planning laws came into effect in November 2021, including a new planning policy that applies consistent regulation of the use of premises for short-term rental accommodation across NSW.
More information about these laws is on the Department of Planning website.
Most hosts must register their properties on the Department of Planning website and STRA register. Relevant properties must be registered before they can be advertised or offered for short-term rental. There are fees associated with registration.
Strata by-laws
Owners corporations can adopt by-laws restricting types of short-term rental accommodation within its strata scheme, but only 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 certain rooms, or are temporarily away from home.
How can by-laws be used?
The model by-laws, if adopted, already include options to help owners corporations 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 need to notify the owners corporation at least 21 days before the change takes place
- owners or residents are 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 need to get rid of garbage using the process set by the owners corporation
- owners, residents and their visitors are 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 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.
Owners corporations can 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 the short-term rental accommodation.
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. Alternatively, the by-law could state that it comes into force at a future date, to give lot owners and residents time to adjust.
Read more about Understanding strata by-laws or Changing strata by-laws on the NSW Government’s pages.
Who is regulated by these laws?
The Code of Conduct applies to all industry participants involved in setting up short-term rental accommodation arrangements including:
The following accommodation arrangements are excluded from the Code of Conduct:
- tourist and visitor accommodation including backpackers’ accommodation, hotel or motel accommodation, and serviced apartments
- boarding houses
- holiday parks
- refuge and crisis accommodation
- disability accommodation
- residential tenancies.
Frequently asked questions
Is the Code of Conduct mandatory?
Yes. Compliance with the Code is mandatory for all participants of the short-term rental accommodation industry where the residential premises are in NSW.
What is a short-term rental accommodation arrangement for the purposes of the Code of Conduct?
Section 54A of the Fair Trading Act 1987 defines a short-term rental accommodation arrangement as follows: a commercial arrangement for giving a person the right to occupy residential premises for a period of not more than 3 months at any one time
Does ‘residential premises’ include part of the residential premises?
Yes. Section 54A of the Fair Trading Act 1987 states residential premises includes part of residential premises.
Where can hosts find an insurance provider to meet their insurance coverage requirements under the Code of Conduct?
Under the Code, hosts must hold insurance that covers their liability for third-party injuries and death.
Use the Insurance Council of Australia’s Find an Insurer service to find insurers that offer this coverage or call 1300 884 934. Alternatively, you can contact insurance providers to discuss your options.
Who can lodge a complaint, and how?
Anyone can lodge a complaint about an alleged breach of the Code. This includes neighbours and owners corporations.
A complaint about an alleged breach of the Code can be made through Fair Trading.
What role do the police and local council have regarding the Code?
The enforcement of planning laws remains with local councils and criminal laws with NSW Police.
The Code of Conduct does not change existing complaint handling processes of the NSW Police and local councils.
Contact your local council with issues or complaints relating to fire safety (including overcrowding), planning approvals, parking or ongoing noise.
The NSW Police can be contacted if the issue relates to an urgent noise issue.
If a complaint is made to NSW Fair Trading regarding the Code, the Commissioner may request that the complaint be made to another body in the first instance, as appropriate.
This includes the police or local council.
Once a complaint has been lodged with the Police or the relevant local council, what is the next step and what evidence is to be provided to NSW Fair Trading?
Contact your local council if you have an issue or complaint relating to fire safety (including overcrowding), planning approvals, parking or ongoing noise. You can contact the Police for urgent noise issues.
An option of issuing a strike for deliberate and persistent breaches of these laws is available at the discretion of the Commissioner for Fair Trading.
Where there has been a proven contravention of other laws (for example enforcement action by local council, a finding in a court or tribunal) this evidence can be provided to NSW Fair Trading to help determine whether to exercise this discretion.
Does a person need a licence to operate a short-term rental premises?
No. Short-term rental accommodation arrangements do not require a person to hold or obtain a licence or permit in order to operate short-term rentals.
However, if a person acts as an agent for arranging stays then they may need to be licensed as a real estate agent in NSW in accordance with the Property and Stock Agents Act 2002.
Does a bond need to be paid for short-term rental accommodation arrangements?
No. There is no requirement for a bond to be paid under a short-term rental accommodation arrangement.
However, a security deposit can be collected in accordance with the Australian Consumer Law – this would be agreed by the host and guest through the short-term rental accommodation arrangement.
Note: if a residential tenancy agreement and not a short-term rental accommodation arrangement is entered into, then any ‘security deposit’ would be a bond under the Residential Tenancies Act 2010 and would need to be handled in accordance with provisions under the Residential Tenancies Act 2010.