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Airbnb reforms unpacked for PMs, property investors

07 June 2018 Sasha Karen
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Airbnb hosts will be limited to renting out their property for only 180 nights a year under new NSW regulations, in a move expected to have a big impact on both property managers and property investors. But what are the changes and what do they mean for you?

Announced by Minister for Innovation and Better Regulation Matt Kean and Minister for Planning, Housing and Special Minister of State Anthony Roberts, the short-term letting reform impacts those in the Greater Sydney area who do not live in the property that is being short-term let — in other words, investors who short-term let their properties.

“We have consulted widely with [the] industry and the community to make sure our nation-leading regulatory framework is the very best approach to short-term holiday letting,” Mr Kean said.

The changes are:

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  • Allowing an owners corporation to adopt a bylaw with a 75 per cent majority to prevent property owners who do not live in their unit to short-term let their property.
  • Regardless of the type of property, properties where the owner does not live in the property have their short-term letting capacity capped at 180 days in the Greater Sydney area.
  • Councils outside the Greater Sydney area have the power to reduce the days a property can be short-term let down to a maximum of 180 days.

The emphasis of the 180 days/year limit, according to Mr Roberts, is roughly the amount of weekends, school holidays and public holidays in any given year, and he claims it is “a fair and balanced approach”.

“Councils outside Greater Sydney can decide if permitting short-term holiday letting for the entire year is acceptable for their local communities. This recognises the importance of tourism in some regional communities,” Mr Roberts said.

Aside from the council change, areas outside the Greater Sydney area are not restricted, except for properties on bushfire-prone lane, which has unspecified planning rules to apply to short-term letting.

Additionally, a mandatory code of conduct for online accommodation platforms will be introduced to set in stone how all parties — agents, hosts and guests — address impacts on neighbours, like noise levels, disruptive guests and effects on shared neighbourhood amenities, according to Mr Kean.

A two-strike discipline policy will also be introduced, where if hosts or guests seriously breach the code twice within a two-year period, they will be banned for five years and placed on an exclusion register.

“These are the toughest laws in the country and will make sure residents are protected while ensuring that hosts who do the right thing are not penalised,” Minister Roberts said.

Two strikes policy

Speaking to RPM sister publication Smart Property Investment, Phillip Rose, director of short-term letting service Hey Tom, agreed that these regulations are tougher than rulings from other states, but the finer details of the reform are yet to be determined, a fact that should be considered.

“Ultimately, Airbnb has a major stimulating effect on the NSW economy predominately through its Sydney footprint and has a negligible effect on housing affordability as prior studies have shown,” Mr Rose said.

The current opaque nature of the two-strike policy is also concerning to Lisa Peterson, managing director of L’Abode Accommodation, a luxury short-term letting management service.

“What is going to constitute a strike? A bad review? A vindictive neighbour? Is there an opportunity for both parties to put evidence forward?” the MD said. 

Ms Peterson said that investors need to be smarter about how they let their properties year-round.

“They may need to partner with a holiday letting real estate agent to get better uplift during the busy/high peak periods for the first 180 nights, then switch the listing to a longer-term let arrangement for the other six months of the year.

“The policy would need to stipulate what the terms look like, i.e. what is the minimum tenancy agreement period.

“Investors will also need to work harder and smarter to build corporate relationships to secure longer-term bookings on those off-peak/six-monthly periods. This will all depend on how the law will be structured and how the constitution is written in terms of the policies, policing and implementing these changes.”

Opportunities for profit

If investors buy properties solely for short-term letting, Ms Peterson warned that these changes would severely impact them.

While some investors may be concerned that supply will be diminished, Mr Rose does not see demand changing as a result, which can actually open up new opportunities for investors.

“While regulation like what has been announced can obviously restrict supply, it should have little effect on demand, so we may see opportunities arise from higher nightly rates being charged to guests,” Mr Rose said.

Ms Peterson agrees with that sentiment, adding that nightly rates could see a much-needed increase.

“If there is lower stock, better-quality properties, then the night rate will increase... At the moment, we are continuing to see it decline.”

Just in NSW (for now)

While these reforms are targeting just NSW, it is more than likely that we can expect similar changes to be introduced in other states and territories, according to Rolf Howard, managing director of Owen Hodge Lawyers.

“Victoria is considering changes to strata laws to address the rising popularity of short-term letting in apartment buildings, while Queensland has introduced legislation to allow councils to act on particularly rowdy short-term letting ‘party houses’,” Mr Hodge said.

“A few Western Australian councils have also begun drafting plans and reviewing policy in light of the rise of the short-term leasing of properties, with particular attention as to how this affects housing costs and residents.

“So, while New South Wales may be the first cab off the rank in regards to short-term letting reforms, I certainly don’t think that we will be the last.”

Sam McDonagh, Airbnb’s country manager for Australia, said that these reforms are a watershed moment for the Airbnb community in Australia as well as international travellers.

“With the cost-of-living painfully high, these fair and innovative rules will make it simple and easy for people and working families to share their own homes to make extra income. The rules will be a boost for the NSW economy and a welcome relief for the countless small, local businesses who rely on the Airbnb guest dollar,” the country manager said.

Airbnb reforms unpacked for PMs, property investors
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