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Are holiday rentals being used as Byron Bay’s supply scapegoat?

By Kyle Robbins
20 June 2023 | 13 minute read
Byron Bay new reb

As the popular tourist destination wrangles with a housing crisis, short-term rental accommodation (STRA) providers are being targeted for years of council shortcomings.

Towards the end of April, the Independent Planning Commission (IPC) delivered the findings of its Short-Term Rental Accommodation Planning Proposal.

Work on the report began in December, when IPC “received a request from the then planning minister to provide advice on STRA and related housing and rental affordability and availability issues in the Byron Shire local government area”, the report reads.

The report handed down 12 recommendations which could be implemented across the council to ease housing and rental pressures being experienced in the tourist hotbed, with the most eye-catching recommendation related to the number of days STRA operators can rent their property out per year.

Presently, STRA providers in the Byron Shire council can lease their properties temporarily to tourists for a maximum of 180 days per year.

In a bid to stem the growing housing and rental crises ravaging the shire, Byron Bay Council initially proposed dividing its jurisdiction into two zones, one where STRA leasing was capped at 90 days per year and another where it could be conducted year-round.

The IPC ruled that the proposal “is unlikely to achieve its stated objective”.

It added the scheme is also at risk of delivering adverse unintended economic and social outcomes, whereby the 90-day cap is significant enough to reduce visitor numbers materially and thereby impact the positive economic activity associated with STRA tourism, but not set at a level which is sufficiently low to trigger the return of sufficient property to the long-term rental market by non-hosted STRA owners”.

Instead, the IPC suggested reducing the cap to 60 days, which would create the financial settings needed to incentivise the use of properties for long-term rental whilst also continuing to support the incidental use of homes as non-hosted STRA”.

Colin Hussey, chief executive at A Perfect Stay, insisted “holiday rentals are being used as a red herring or a scapegoat”.

Despite his assessment that the IPC did a “pretty good job” and provided a view on the situation he found to be balanced, Mr Hussey expressed his disagreement at “some of the ways they think that it [housing and rental crises] can be solved”.

With just under 1,000 of the region’s 20,000 dwellings listed for use as STRA, he believes providers of holiday rentals aren’t the driver of Byron’s supply crisis.

“The real issue is there hasn’t been enough infrastructure, there hasn’t been enough thought, there hasn’t been enough put into providing appropriate accommodation for all different levels,” he explained to REB.

It’s an issue he stressed has been occurring for at least two decades and recent rhetoric spouted by the council blaming Byron Bay’s current housing landscape on an influx of wealthy arrivals from Sydney and Melbourne as a deflection aimed at the “easy, soft targets”.

“What it’s doing is deflecting the fact that they haven’t actually done anything for 20 years,” he said.

Byron Bay established itself as a significant tourism stronghold in the late 1970s following the closure of the region’s meat works industry, which decimated the town. A significant push towards advancing Byron’s tourism advanced the region’s position as one of Australia’s most popular tourist destinations has grown into a $1 billion industry synonymous with the town’s identity.

“Tourism is the number one economic driver in the region by a mile,” Mr Hussey said.

Of the revenue generated by the industry, 44 per cent, or $440 million, is credited to STRA providers and Mr Hussey believes targeting the industry will spell bad news for the region.

“You shut down tourism in Byron and you won’t have to worry about housing because there won’t be any jobs.”

According to Michael Crosby, head of public policy at Airbnb in Australia and New Zealand, restricting STRA to 90 nights per year would cost the economy well over $100 million. Dropping this down to 60 days “will have even greater economic consequences”.

“To date, there is minimal evidence to suggest that lowering the nights cap would free up the availability of housing in the Byron Shire.”

The importance of STRA to the region’s economy was acknowledged in the ICP’s final report, crediting it as playing a “significant role” in the economic prosperity of the region moving forward, especially as visitor numbers are expected to swell in the coming years.

Mr Hussey believes schemes targeted at withdrawing STRA properties onto the long-term rental market, or into the permanent, affordable housing market, are misguided for a few reasons, including the fact “none of them are affordable”.

“I don’t think you need to be a rocket scientist to work out that a $20 million house is probably not going to fit the affordable housing category.”

Moreover, Mr Hussey, who explained how conversations he undertook with owners of Byron’s STRA revealed 97 per cent of them stated any caps are irrelevant and their intention will not be to place their property on the long-term market.

“We asked them why, and they all pretty much said verbatim, ‘we bought the home because we want to use it. We want to have a holiday in the Byron area. We’ve been coming there for years. We love it. We want to contribute to the local economy [and] eventually we think we’d like to move up to the area.”

“Most of my owners would be financially better off renting permanently than they would be short term,” he said, before adding “it is just not true that the owners make all this money short-term letting. Most of them would be better off financially permanently renting their homes, but they don’t rent them because they want to use them occasionally.”

Targeting a 60-day night yearly cap for STRA providers in Byron Bay as a remedy for the wider woes of the region’s housing market appears unlikely to inspire a swift turnaround in the fortunes of the local property sector.

Mr Crosby insisted these changes, should they be implemented, “will place hosts in Byron Bay on a vastly unequal footing, and ultimately hurt guests, local businesses, and communities across the area by reducing choice, availability, and affordability of accommodation”.

In the eyes of Mr Hussey, individual homeowners have created the region’s supply crunch and “it’s [not] individual property owners’ job to fix the problem and they shouldn’t have their rights removed to solve what is a societal issue”.

“There’s no crime against owning a home and if you’ve got the right to use it, they should be allowed to use it however they want,” he concluded.

Are holiday rentals being used as Byron Bay’s supply scapegoat?
Byron Bay new reb
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