Short Term Letting in Residential Homes
(Private Members Statement, Tuesday 31 May 2016, Legislative Assembly, NSW Parliament)
Governments cannot ignore the shared economy and have a responsibility to introduce appropriate controls that enable it to grow without impacting on others.
AirBnB began in 2008 as a way for people to open a spare room to visitors. Occupants of the home could make a few spare dollars, while visitors could find an affordable accommodation option. Some people use it to let their homes for a short period while on holiday.
This is what the sharing economy is about and I do not oppose it; however the business model is being hijacked by some to make massive profits at the expense of neighbours, community and – in the case of apartments – other owners. Stayz is also a popular holiday letting site used by owners.
In the inner city, short term accommodation is changing the landscape of neighbourhoods, especially in larger apartment buildings.
Some buildings have turned into quasi hotels with permanent residents the minority. People do not buy or let a home to live in a holiday facility.
Short term letting has a number of impacts on other residents and owners. Visitors in holiday mode can create noise and overrun facilities like pools and gyms; the constant movement of luggage on wheels and service trolleys can cause greater wear and tear of common property, and the transience of visitors reduces the sense of security and community.
Commercial listings on AirBnB are growing with many hosts letting more than one property. A new industry is evolving to serve these owners, providing locations to pick up keys, and cleaning and maintenance services. Landlords make more profit than if they let homes to long term tenants.
Allowing free-for-all conversion of residential homes to visitor accommodation reduces the supply of available homes, contributing to Sydney’s housing affordability crisis. It also prevents strategic land use planning. This does not guarantee the best outcome for our city.
Cities around the world have tried to grapple with the growth in short term letting. Some have imposed time limits on how long a property in a residential zone can be used on a short term basis, while ensuring the property remains residential for the majority of the year.
I support this approach however its success has been limited in many cities by lenient provisions and a lack of enforcement; New South Wales must learn from other experiences and listen to the community to get the balance right.
Finding the right level of restriction will be vital. London and San Francisco use 90 days, and Paris uses 120 days. I share my constituents’ view that these are too high and go well beyond the normal period of a holiday and what could be justified as the sharing economy. Four weeks would be more appropriate. Different limits could apply to letting a spare room than to an entire home, provided there are protections against overcrowding.
Owners corporations should be able to take a bond from owners or occupants letting their properties out on a short term basis in case of by-law breaches such as noise or damage to common property and action should be available in the NSW Civil and Administrative Tribunal. The Victorian Government will allow neighbours and owners corporations to take a landlord to the tribunal for impacts like property damage and noise with the potential to lose the right to host holiday rentals on a three strikes basis.
The laws should include a mechanism to stop clustering of short term rentals in apartment buildings to prevent homes suffering cumulative impacts from multiple adjacent lots.
Owners corporations must be able to ban any form of short letting in a building or put limits above those that state laws impose. Approval for short term letting should be required by the owners corporation either by special or unanimous resolution, with approval not to be based on proxies.
Importantly, there needs to be a robust enforcement regime so that properties not complying with restrictions are stopped. It is now unlawful to operate short term letting in residential zones but councils struggle to prevent the practice.
Councils can’t use circumstantial evidence such as evidence of persons entering and leaving a premise or depositing luggage, advertisements or room layout. Instead officers must witness the practice first hand, which is difficult because they need an owner’s or occupant’s permission to inspect. Councils must also determine the type of unauthorised use of a premise such as identifying whether it is being used as a boarding house or a backpackers’ hostel, which increases the level of evidence needed. These challenges must be fixed before any new regime is introduced.
Introducing an obligation on host sites like AirBnB to provide data for enforcement to councils is essential so that action can be taken against hosts who breach the laws.
The sharing economy is creating challenges, but governments have the tools to respond in a way that can encourage innovation while protecting the community. I look forward to the outcomes of the current inquiry.