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22 June 2018
(Bills - Second Reading Debate, 20 June 2018, Legislative Assembly, NSW Parliament)
The Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018 gives owners' corporations a statutory power to ban short-term rentals in their building by special resolution for lots that are not the host's principal place of residence. In situations where a lot is the host's principal place of residence, the bill includes an express prohibition on by-laws that control or limit short‑term renting. The bill also provides a framework for a mandatory code of conduct for short-term rental participants, which I understand is aimed at preventing party houses.
At the outset, I acknowledge that this is a complex and emerging area of law and policy, as we have already heard and seen in the debate. I thank the Minister and his staff for the ongoing consultation with me and key stakeholders with the intention of getting the balance right. Short-term letting has a place in the economy but if left unchecked it can have significant impacts on community, amenity and housing affordability. International evidence from cities of high tourist demand, such as New York, Paris, Barcelona and Berlin, shows that when short‑term letting is poorly regulated it leads to widespread community outrage and growing calls for blanket bans.
The communities I represent are already feeling the pressure and seeing their neighbourhoods and buildings change. One only has to look at Millers Point, which not long ago supported a strong and supportive community of both social and private housing residents. After the eviction of all social housing tenants, private residents now complain that their tight-knit community has been replaced by transient holiday visitors because many homes sold were converted into holiday accommodation. I welcome the new provisions in the bill to allow an owners' corporation to introduce a by-law to ban short-term letting which is not the host's principal place of residence. I understand the term"principal place of residence" is widely used and current interpretations with the example of land tax and capital gains tax will apply. This is different to how the planning system will define commercial operations, which will rely on how many days a year a premise is let on a short-term basis, with the Government using 180 days as the limit.
There may be situations where a lot could comply with the planning laws for a residential home while at the same time not be the host's principal place of residence and therefore make this by-law useful. It will also enable owners' corporations to take action on commercial properties in addition to planning enforcement. However, it will be difficult for owners' corporations to determine whether a lot is the host's principal place of residence. Someone letting their property on a short-term basis can keep their name on the strata roll as the occupant and on the utility bills for the property. Owners' corporations may be unable to track the number of days a year short-term visitors stay in a place and the bill provides no mechanism for monitoring, such as a mandatory registration system.
Time will tell whether these new powers will help stop buildings turning into quasi hotels. Given we are talking about commercial activity, bans should apply automatically for all buildings, with each scheme able to vote to opt in to commercial short-term letting rather than being required to opt out. Owners' corporations should have greater power to democratically set the rules that short-term letting can occur in their building to suit their needs. For example, they should be able to restrict the number of lots let on a short-term basis at a certain time, such as New Year's Eve. There is no evidence to suggest that giving owners' corporations these powers would result in widespread bans. To discourage bans, the Government should have given owners' corporations new tools to help them manage problems beyond party houses. Model by-laws with different levels of restrictions could have been developed to help owners adopt regimes that suit their buildings' needs.
Owner corporations could be helped to take a bond from hosts to deal with by-law breaches or damage to common property. Also needed are new powers to cover increased costs as a result of short-term letting from hosts, such as to upgrade insurance policies, fire systems, building and waste management, and pool facilities. We know that cost is a significant concern among owners' corporations and they will continue to look for ways to do this on their own. More and more developers agree that apartment communities should have a strong say in how short‑term letting operates in their buildings because they understand that a building with a strong community of permanent residents is a more attractive place to live than a building overrun with transient visitors.
While much of the focus has been on apartments, short-term letting is also a concern for people who live in terraces and freestanding homes in areas of high tourist demand. Terrace residents in my electorate report that neighbourhoods have lost their sense of community where large numbers of residents have been replaced with holiday makers. I have already cited the example of Millers Point.
The planning instrument promised by the Government aims to address this by requiring a change of use if a home is let for more than 180 days on a short-term basis. There is concern that 180 days does not reflect the sharing economy but supports commercial operations. Short-term letting has a history of planning law breaches. The Government has not introduced any new mechanism to monitor which homes are being let and when and there is no way to ensure compliance with such a long period. Furthermore, letting a home for half the year on a short-term basis could be more profitable than signing a lease with a long-term tenant, who may have more demands on a property. Six‑month leases could become the norm, with tenants evicted for the warmer months when tourism increases.
Other cities such as London, San Francisco, New Orleans and Reykjavik have a requirement of 90 . Paris, which had 120 days, introduced a registration system because its limit was being flouted. The Tenants Union research suggests that 60 days would be best. While I support the aims of the code of conduct to suspend homes from short-term letting for five years if there are two serious breaches over two years, the details are not yet available and the focus appears to be on party houses. Concerns across the world and in my electorate go beyond just party houses; the dominant concerns are the loss of community and impacts on housing affordability. These concerns these should not be ignored.
An estimated 6,000 homes have already been removed from Sydney's rental market. An assessment by AirDNA in September last year indicates that it could be over 3,000 in my electorate alone. Research by the Griffith University and the University of Sydney published inThe Conversation on 21 May in an article titled, "Airbnb: who's in, who's out, and what this tells us about rental impacts in Sydney and Melbourne", shows that short‑term letting activity, particularly commercial activity, is focused in certain areas. It concludes that looking at the impact on rent across the metropolitan region is misleading because the impacts are geographically concentrated in the inner city and harbour and coastal areas where tourism is high. In these areas, including my electorate, residents are being squeezed out. [Extension of time]
On 7 June an article in theAustralian Financial Review by Jimmy Thomson and Sue Williams titled, "Tenants Union says Airbnb 'skewing' study" confirms that the Tenants Union has serious concerns about the impact of short-term letting on rental affordability. The executive officer states that Airbnb cherrypicked data from its report to back its claim that rent has not been affected by short-term letting. The Tenants Union position is to have limits on personal use, planning controls on commercial use and a register to ensure compliance. I share the concern of the Opposition that the 180‑day limit is not world's best practice to prevent impacts on rental affordability. The Government will need to monitor this in the future, as have governments across the world.
Without details of the code of code of conduct and planning instrument, it is difficult to know how well the Government's new regime will address concerns with short-term letting. I have only touched on issues but there are additional concerns such as homes having adequate insurance, fire safety measures and whether councils will be able to enforce new rules. A mandatory registration system is essential for compliance with this model. Without transparency about the details of the letting of properties, commercial operators will be able to easily contravene laws and hijack the system. A mandatory short-term letting registration system would ensure that participants comply with the Government's regime because oversight and enforcement of the 180‑day limit will be possible. A registration system would also enable the Government to collect data to establish any long-term impacts on housing affordability.
In a briefing with the Minister last week, we discussed that the code of conduct could provide for a registration system of premises. I believe this is essential to the success of the Government's regime. I foreshadow that I will move an amendment at a later stage to ensure that the bill will provide for a mandatory registration system showing all premises that are let on a short-term basis and when. The promised 12‑month review of the new system must ensure that short-term letting remains a part of the sharing economy and does not negatively impact on rental affordability or strata communities. I hope that the review will engage experts and involve thorough assessments. In closing, I pay tribute to the fantastic work of the Owners' Corporation Network, particularly Karen Stiles and Stephen Godard, in mobilising apartment owners and residents into action to protect their democratic rights. I thank the thousands of people who signed my petition for by-law rights to limit short‑term letting. Their efforts have ensured that we did not end up with a free-for-all system. I will not oppose the bill.
To read the speeches of other Members on the subject, click HERE.
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Address: Ground Floor, 21 Oxford StreetDarlinghurst NSW 2010 (cnr Brisbane Street).Visit the Sydney Electorate Office HERE.
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