Resident owners’ report slams holiday letting laws


The peak body representing apartment owners in NSW has blasted the incoming short-term holiday letting laws as “excessively generous” to holiday letting hosts and a threat to the very nature of apartment living in Australia.

The new laws, passed earlier this year in NSW but yet to be fully enacted, threaten the security of residents as well as the attraction of having apartments as permanent homes, when a small minority of owners can force holiday letting on the rest of residents, says the Owners Corporation Network (OCN).

“The intention to permit residential strata properties to be used for short-term letting purposes presents a very significant challenge to the integrity of strata living,” says OCN Executive Officer Karen Stiles in a letter accompanying the peak apartment owners’ body, in a 21-page submission to the Planning and Innovation & Better Regulation departments.

It claims that, with the lack of controls envisaged in the current regulation, there will be clustering of holiday rentals in buildings in more popular areas, with long-term residents and tenants being forced out while those who remain will be subjected to the worst effects of out-of-control holiday letting.

“The intended changes to the planning system open residential strata communities to unlimited short term letting for tourists and visitors,” says the summary of the OCN’s submission to ongoing discussions on a code of conduct for holiday lets in apartment buildings.

“There are no controls on the prevalence, turnover, or spatial distribution of multiple lots used for short term letting dispersed through a strata community,” it continues.

“There is no local council oversight of regulatory standards and no enforcement mechanism and there is confusion between agencies about how the planning system will interact with the Code of Conduct.”

Earlier this year, Innovation and Better Regulation Minister Matthew Kean and Planning Minister Anthony Roberts were within minutes of  announcing a laissez-faire law on holiday letting – with no limits on the number of nights apartments could be let, no restrictions on commercial letting of multiple units by investors and head tenants and no option for 99 per cent of owners in a building to limit holiday lets if even one owner wanted to do it.

However, a threatened revolt by government back-benchers saw the press conference abandoned and a Bill hastily cobbled together allowing apartment owners to pass by-laws banning short term lets was included.

Now, however, apartment owners are realising that a concerted effort by 25 percent of owners – in reality, given typical voting patterns, probably much less – could see holiday lets forced on buildings where the vast majority of owners don’t want them but have yet to pass the by-laws needed to ban them.

“The OCN regards short term letting as a commercial activity and a non-resident use that is high risk in a residential strata community,” says the report.

“The changes are excessively generous while the social and financial consequences fall on residents, tenants and other investors who understand the negative impacts of STRA.

“It puts the security of residents, and the character, standards, and reputation of their strata in the hands of the tourism market, without their consent.

“It will be a complete shock to many people who live in strata that investors in their building can start doing ‘Airbnb’, and, if those investors have more than 25 per cent of the unit entitlement that there is nothing owner occupiers or other investors can do to stop it.

“The planning system should not permit a Lot to be used for short term letting in a residential strata community (wholly or partly) without the consent of the local council and the permission of the owners corporation.

“The policy does not ‘strike the right balance’ and should be reconsidered,” says the report which ads that permitting residential strata properties to be used for short-term letting purposes presents “a very significant challenge to the integrity of strata living.”

“There are no controls over the number of lots that may be used for STRA purposes or their distribution through a strata scheme,” says the report. “The 180-day limit for Un-Hosted STRA in Sydney is excessively generous and probably cannot be enforced. This is not a minor impact on strata communities.”

The report also claims that the loss of stock from the residential tenancies market has already been identified, and claims that housing supply and affordability will worsen in key locations in Sydney and regional coastal areas.

“People deciding on where they want to live, and entering financial arrangements, need the certainty, confidence and assurance that comes from knowing that if they have bought into a residential strata property that it will remain residential,” the report continues.

“The intention to declare short term letting an ‘exempt any complying development’ is a major change. OCN urges the department to extend the period for comment on the Explanation of Intention Effect, and to conduct public information sessions in Sydney and regional areas.”

The government’s view is that extensive consultation was conducted before the current legislation was devised.

However, critics point to many serious flaws in the process, not least that they were conducted before the full impact of online holiday letting had been observed.  Since then we have also witnessed “astroturf” (fake grass roots) campaigns by the cashed-up short-term letting industry, and the belated efforts in other world cities to rein in holiday letting and undo the decrease in housing availability and increase in rents in their local communities.

The under-the-table nature of commercial holiday letting of whole homes (rather than genuine sharing) has been exposed in cities where online operators have been compelled to police a public register of their “hosts”.

In cities like Los Angeles, and New York it is widely accepted that drops in listings by as much as 50 per cent occurred after a register was introduced because huge numbers of hosts had been letting their properties illegally while trying to evade paying tax on their incomes.

You can read the whole OCN report HERE.

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