Duane Keighran

New South Wales introduced changes to strata laws in 2020 to address numerous issues that Owners Corporations and residents were facing, with the increasing numbers of short-term renters. Notably, an Owners Corporation is now able to pass a by-law (with a 75% majority), to prevent a scheme from being used for short-stay accommodation, as long as a property is not the principal place of residence for the owner, or is a single room only that is being utilised as short-stay accommodation

The NSW Code of Conduct – where are we now?

A mandatory Code of Conduct for the Short-Term Rental Accommodation Industry in NSW commenced on 18 December 2020 (the Code). The Code did not have any impact on rules around residential tenancies and other traditional forms of short-term accommodation like hotels, targeting solely commercial arrangements where a tenant is given the right to occupy a residential premises for up to three months at a time.

Strata organisations can ban short-term rentals where it is the owner’s non-primary residence.

The Code was implemented to regulate the industry and to establish mandatory minimum standards of behaviour and requirements for booking platforms, hosts, guests and letting agents. The Code also establishes dispute resolution and complaint processes and is generally intended to facilitate the oversight of the short-stay industry in NSW by NSW Fair Trading.

Further projected changes in 2021 include the introduction of a short-term rental accommodation register, and changes to planning laws which will mean consistent regulation of premises used for short-term rentals across NSW. These concepts have not yet been implemented. Perhaps because of the impact that COVID has had on the ‘Airbnb’ industry, these changes are not as urgent as they may once have been.

Melbourne is currently less strictly regulated on its short-term letting ecosystem.

The Victorian experience

The holiday rental/short stay accommodation industry in Victoria is less strictly regulated than in NSW. Holiday and short-term accommodation landlords are instead guided by a Code of Conduct which sets out their management and maintenance responsibilities. The only government intervention seen so far is the implementation of a complaints process, which is administered through changes introduced in February 2019 to the Owners Corporations Act 2006.

The changes enable the Victorian Civil and Administrative Tribunal (VCAT) to impose fines, award compensation and prohibit apartments from being rented out for short-stay accommodation. Owners Corporations are also able to issue breach notices to guests. This additional form of regulation certainly imposes some accountability for ‘Airbnb’ hosts which is no doubt welcomed by the hotel industry.

Victoria Premier, Daniel Andrews

Recently, The Owners Corporations and Other Acts Amendment Bill 2019 (VIC) was passed but is not yet operative.

Initially, the Bill proposed to limit certain contracts for hotel, resort and serviced apartment complexes to three years in duration, as it does with other service and management contracts entered into in relation to the Owners Corporations Act 2006 (VIC). After lobbying from the hotel and serviced apartment industry, this proposal to limit the term of hotel management agreements (and the like) was thankfully deleted.

However, the power remains to pass regulations that may have an impact on some management or service related contracts for services provided by hotel and resort operators in mixed use schemes.

The effect of regulations on short-term rentals is a moving feast and still to be fully realised.

Once enacted, regulations may be made prescribing requirements for hotel and resort management contracts that may restrict the term of those contracts, increase, limit or place parameters on fees and charges under those contracts and prohibit or regulate the inclusion of specific terms and conditions in those contracts.

It is difficult to accurately predict the potential impacts of the Bill on the short-term stay and hotel industry until regulations are circulated. We will continue to monitor any proposed regulations and will provide further updates as the situation becomes clearer.

Duane Keighran is a leading hotels and hospitality lawyer, representing hotel operators, investors and developers across Australia.