17 Aug The NSW Short Term Rental Legislation – How It Could Affect You
The NSW Government recently announced it’s long awaited legislation around short term rentals in NSW. While the finer details have yet to be decided, the key points have been announced and many property investors are wondering how this will impact them.
Mike Johnson, Chief Sales Officer at MadeComfy, talks about the new legislation and how it will affect investors who use short-term rental as an income stream.
What are the basic points around the new legislation?
Overall the new legislation improves the clarity for owners, guests and short term rental providers when looking to operate in NSW.
NSW are introducing a 180-day cap on short term rentals for properties in Greater Sydney where the owner does not live on site, such as investment properties. What is important to understand is that it is 180 booked nights, which equates to roughly 240 nights at a usual occupancy rate. Also if you are a homeowner that is present on the property then part of the house (one room or more) can be rented 365 days a year with no restrictions.
An equally important part of the new legislation gives new rights to owners that operate short-term rentals in apartment blocks. Strata and Body Corporate can only prevent investment property owners from leasing their property out short term if 75% of the owners are against it.
Lastly the new legislation will introduce a code of conduct to manage guest behaviour, and will give structure and a process to help ensure owners and guests are responsible with noise, behaviour and respecting their neighbours.
In the lead up to the legislation announcement there has been a lot of discussion about preserving the local communities that host many short-term rentals. How will this new legislation address these needs?
When he announced the new legislation, Matt Kean, Minister for Innovation and Better Regulation has said that a two-strike rule will come into effect for those “breaching the code of conduct”. This refers to, “noise levels, disruptive guests and the impact short-term letting had on shared neighbourhood amenities”.
The details of what constitutes a breach and how this will be decided, appealed and tracked are still to be announced. However, this highlights the importance of using a professional, well-staffed and responsible management company, which reacts quickly to an guest issues and reports and tracks issues carefully.
How does the new legislation in NSW compare to other cities around the world?
This new legislation is giving NSW property owners more leeway than many other cities around the world. Berlin overturned their total Airbnb ban on May 1st 2018 and announced that property owners who occupy a property are allowed to rent out their home as much as they want under certain conditions. People that own a second property, however, are allowed to rent it for a maximum of 90 nights a year. Paris instituted a 120-day annual cap on the renting of short-term rental properties in November 2017. New Orleans voted to keep short-term rentals to 90 days a year in 2016, and San Francisco has also instituted a 90 day rule. To this end, we think that the legislation that came in place in NSW is rather progressive compared to what we have seen in other countries.
How do short-term management companies such as MadeComfy, Airbnb and Stayz feel about the new legislation?
Here at MadeComfy we welcome any progressive and sensible regulation and we feel it gives more clarity and better rights to owners moving forward.
We already operate strict rules and guidelines for guests in our properties and this will encourage more providers to do the same.
The additional rights for owners in a building managed by Strata or a Body Corporates is great step forward, and prevents buildings from attempting to restrict short term rental without the proper authority.
Airbnb’s head of Global Policy and Communications, Chris Lehane, also welcomed the government’s announcement.
“I think they’ve taken an approach that’s designed to balance [different] interests and I think ultimately they’re taking a fair, forward-looking and progressive approach.”
How will this new legislation impact investment property rental income?
Maximising rental income is the goal of every property investor, and the key factors involved in achieving this have not changed. MadeComfy use unique data and our own algorithms to optimise nightly pricing. The key is finding the optimum balance between nightly rates and occupancy levels, which can sometimes mean a lower occupancy rate but at a higher nightly rate.
In addition, MadeComfy offer a hybrid approach, by continuing to offer short-term rental services as well as offering mid-term placements, we can maximise the rental returns to our clients throughout the year without any limitations and operating within the new legislation.
What’s the best way for investment property owners to move forward now?
This new legislation reflects the importance of a community-focused approach to short-term letting. Now, more than ever, it’s important to understand the rules and your rights as a host within the boundary of the law and play a part in sustainable short-term rental industry. You can work with a short-term rental management specialist who can take away the hassle and deliver great rental returns.