Short-Term Rentals in Strata Properties: What Owners Need to Know About Airbnb

8 min read

The rise of platforms like Airbnb has piqued the interest of many strata property owners. Whether you’re considering renting out a spare room or your entire apartment while you’re away, short-term rentals present an intriguing opportunity to earn extra cash.

These rentals offer more than just financial benefits; they can enliven communities by welcoming visitors. However, there’s a potential downside: temporary guests may occasionally disrupt the peace in residential areas.

To address these concerns and maintain harmony, the NSW government has introduced new regulations. Strata owners can now offer short-term rentals for up to three months. This updated framework includes:

1. A Code of Conduct
2. A centralised registration system
3. State-wide planning guidelines
4. Strata scheme by-laws that may restrict or prohibit such rentals

If you’re a strata owner contemplating becoming an Airbnb host, this guide will provide you with crucial information to navigate this landscape.

Understanding Short-Term Rental Accommodation

For strata owners considering Airbnb listings under three months, it’s essential to grasp the intricacies of short-term rentals. These involve the commercial leasing of lawfully constructed dwellings for less than three months. They typically fall into two categories:

1. Hosted rentals: The property owner remains on-site during the guest’s stay
2. Non-hosted rentals: The property is entirely available to the guest

1. Hosted Rental Accommodation Explained

Hosted short-term rentals occur when the landlord lives on the same premises as the tenant during their stay. This includes:

• Renting out part of your strata property while occupying another section
• Letting a separate space (e.g., a granny flat) on your property where you reside

The key factor is your physical presence on the property during the rental period.

2. Non-Hosted Rental Accommodation Defined

Non-hosted short-term rentals involve the host not sharing the premises with the guest. Examples include:

• Individual units in properties with on-site management or concierge services
• Strata apartments leased on Airbnb while the owner resides elsewhere

The distinguishing feature is the property owner’s absence during the guest’s stay.

Short-Term Rentals in Strata Properties: Is It Allowed?

Yes, you can rent out your strata apartment for short-term stays on platforms like Airbnb. All legally constructed dwellings designated as ‘residential accommodation’ in any land-use zone are eligible for short-term rentals. However, there are some key requirements to keep in mind:

• The property must be part of residential accommodation.
• It cannot be a boarding house, group home, hostel, rural workers’ dwelling, seniors housing, or co-living housing.
• The dwelling must not be government-funded refuge or crisis accommodation.
• It should be permitted (with or without development consent) on its current land.
• Registration under the Environmental Planning and Assessment Regulation 2021 is required.
• The property must have a current fire safety certificate or statement, or have no fire safety measures implemented, required, or proposed.
• The dwelling should be permanent (not moveable like an RV).
• The purpose of the short-term rental must be lawful.

Most strata apartments typically meet these criteria. However, before listing your property, it’s advisable to:

1. Contact your local council for development consent information
2. Review the by-laws established by your owners corporation

These steps will ensure you’re fully compliant with all relevant regulations.

Can Owners Corporations Limit Short-Term Rentals in Strata Properties?

Section 137A of the Strata Scheme Management Act 2015 grants owners corporations the authority to create by-laws that regulate or restrict short-term rental accommodation in their strata properties. They can even prohibit short-term stays in units that aren’t the host’s primary residence. However, if your strata apartment is your main home, you retain the right to offer short-term rentals while living there or during temporary absences. In this case, the owners corporation cannot impose a complete ban on short-term rentals.

Before the introduction of Section 137A, the legal stance on owners corporations’ powers to regulate short-term rentals was unclear. For instance:

• In Estens vs Owners Corporation SP 11825 [2017] NSWCATCD 52, the NSW Civil and Administrative Tribunal invalidated a by-law prohibiting illegal uses of strata property, including short-term letting.
• While no other NSW case law directly addresses this issue, courts in similar jurisdictions have upheld owners corporations’ powers in this regard.
• In O’Connor (Senior) and others v The Proprietors, Strata Plan No. 51 (Turks and Caicos Islands) [2017] UKPC 45, the Privy Council deemed a by-law banning short-term letting valid under a provision similar to NSW law.

It’s important to note that Section 137A came into effect on 10 April 2020. Any by-laws restricting short-term rentals made before this date must align with Section 137A. Any portions of these by-laws that contradict Section 137A are no longer legally valid.

Short-Term Rental Duration Guidelines

The allowed duration for short-term rentals of your strata apartment varies based on whether you occupy the property or not:

1. Hosted short-term rentals:
   • You can offer these year-round without restrictions
2. Non-hosted short-term rentals:
   • Limited to a maximum of 180 days per year
   • Exception: Rental periods of 21 consecutive days or more to the same tenant don’t count towards this limit

These guidelines ensure a balance between allowing property owners to benefit from short-term rentals and maintaining the residential nature of strata communities.

Eligible Locations for Short-Term Strata Rentals

The State Environmental Planning Policy (Housing) 2021 outlines specific areas where dwellings can be used for short-term rentals. These include:

1. Greater Sydney region, excluding the Central Coast local government area
2. Ballina local government area
3. Byron Shire local government area
4. Designated areas within the Clarence Valley local government area, as shown on the Clarence Valley Short-term Rental Accommodation Area Map
5. Specified regions in the Muswellbrook local government area, as indicated on the Muswellbrook Short-term Rental Accommodation Area Map

If your strata apartment is situated in any of these locations, you may be eligible to list it on platforms like Airbnb for short-term stays, provided you meet all other requirements.

This policy ensures that short-term rentals are concentrated in areas that can accommodate increased tourist activity while preserving the character of other residential zones.

Compliance Requirements for Short-Term Strata Rentals

Before listing your strata apartment for short-term stays on platforms like Airbnb, you must fulfil several key compliance requirements:

1. Registration:
   • Register your property on the Department of Planning, Industry and Environment’s Short-Term Rental Accommodation (STRA) register
   • Pay all associated fees
2. Timing:
   • Complete registration before advertising or offering your property for short-term rentals
3. Safety:
   • Ensure your strata property meets all fire and safety requirements

These steps are crucial to maintain legal compliance and ensure guest safety. Completing these requirements helps create a responsible and well-regulated short-term rental market within strata communities.

Code of Conduct for Short-Term Rental Hosts

The NSW government’s Code of Conduct for the Short-term Rental Accommodation Industry applies to all participants, including strata property owners who rent their units on platforms like Airbnb. As a ‘host’, you must adhere to these key obligations:

1. Insurance:
   • Maintain liability coverage for third-party injuries and death
2. Property Standards:
   • Ensure the property meets advertised standards
   • Keep the property clean and safe for guests
3. Guest Communication:
   • Provide an emergency contact
   • Inform guests of potential property risks
   • Promptly address complaints from strata renters
   • Notify guests of any booking or property changes
4. Legal Compliance:
   • Register the property and owner on the short-term rental accommodation premises register
   • Adhere to all applicable laws and regulations

These requirements aim to create a safe, transparent, and well-regulated short-term rental environment in strata communities. Compliance with this code helps protect both hosts and guests while maintaining harmonious relationships within the strata scheme.

Penalties for Non-Compliance with Short-Term Rental Laws

Failure to comply with applicable laws when renting out your strata apartment for short-term stays can result in disciplinary actions and penalties. NSW Fair Trading has the authority to impose the following:

1. Warnings or Directions:
   • Issue warnings or instruct hosts to take or cease specific actions
2. Monetary Penalties:
   • Impose fines for violations
3. Strike System:
   • Record a ‘strike’ against a host, property, or guest for serious Code breaches
4. Exclusion Register:
   • List a guest, host, or property on the Exclusion Register for:
     • Two serious ‘strikes’ within a two-year period (5-year exclusion)
     • Criminal charges, if deemed in public interest (until proceedings conclude)
     • Conviction of a criminal offence (specified period or indefinitely)

The Code ensures a fair process before any adverse action is taken against property owners. It also provides an appeals mechanism for penalties imposed due to law breaches.

These measures aim to maintain integrity in the short-term rental market and protect all parties involved in strata communities.

Conclusion: Short-Term Rentals in Strata Properties

While it’s possible to list your strata apartment on platforms like Airbnb, the process involves more than simply creating a listing. You’ll need to navigate various legal and compliance requirements, including:

1. Checking your strata scheme’s by-laws
2. Registering your property
3. Ensuring safety standards are met
4. Adhering to the Code of Conduct

Given the complexity of these regulations, seeking expert advice can be beneficial. It can help you avoid potential issues and ensure you’re fully compliant with all relevant laws and regulations.

Consider consulting with legal professionals experienced in strata law for guidance on short-term rentals in strata schemes. They can provide valuable support to apartment owners, property managers, and owners corporations navigating this process.

By taking these steps, you can confidently and legally participate in the short-term rental market while maintaining harmony within your strata community.