With the continued popularity of Airbnb and other short-term rental platforms, strata owners, residents and strata committees need to understand the rules that apply to short-term rental accommodation in NSW.

Short-term rental accommodation (STRA) is regulated in NSW through a combination of planning laws, fire safety requirements, a mandatory STRA Register, the NSW Fair Trading Code of Conduct and strata bylaws.

One of the most important issues for strata schemes is whether an owners corporation can restrict or ban Airbnb-style short-term letting.

Can a strata scheme ban Airbnb in NSW?

Since 10 April 2020, NSW strata legislation has allowed an owners corporation to adopt a bylaw restricting or prohibiting short-term rental accommodation in certain circumstances.

Under section 137A of the Strata Schemes Management Act 2015, an owners corporation can make a bylaw prohibiting a lot from being used for short-term rental accommodation where the lot is not the host’s principal place of residence.

However, a strata bylaw cannot prevent short-term rental accommodation where the property is the host’s principal place of residence.

In practical terms, this means a strata scheme may be able to prohibit an investor-owned apartment from being used for Airbnb or other short-term accommodation, while an owner or resident using their principal place of residence may still be permitted to offer short-term accommodation in accordance with NSW law.

The NSW Government also makes it clear that owners corporations can introduce bylaws to manage other issues associated with STRA, including occupancy limits of up to two adults per bedroom.

Before introducing or changing a bylaw, owners corporations should consider the particular circumstances of their scheme and obtain appropriate professional advice where necessary.

Short-term rental accommodation rules in NSW

The NSW Government operates a state-wide regulatory framework for short-term rental accommodation — or STRA which includes:

  • A planning framework.
  • Fire and safety requirements for STRA dwellings.
  • A mandatory STRA Register for most residential STRA properties.
  • A mandatory Code of Conduct for industry participants.
  • An Exclusion Register for participants who have been excluded from the industry.
  • Strata scheme bylaws that may restrict certain forms of short-term rental accommodation.

The planning framework came into effect on 1 November 2021 and continues to regulate how residential properties can be used for short-term rental accommodation across NSW.

The NSW STRA Register

Most hosts using a residential property for short-term rental accommodation must register the property on the NSW Government’s STRA Register before offering it for STRA.

Once registration is completed, the property is issued with a STRA Property ID, which must be displayed on applicable online property listings.

Hosts must also confirm that the property complies with the relevant STRA fire and safety requirements and comply with the NSW Short-term Rental Accommodation Code of Conduct.

STRA registrations must be renewed annually to remain active. The NSW Planning Portal currently provides information about registration, renewal, deregistration and managing STRA listings.

Hosted and Non-Hosted STRA

NSW planning rules distinguish between hosted and non-hosted short-term rental accommodation.

Hosted STRA

Hosted STRA generally applies where the host resides on the premises while providing short-term accommodation.

Hosted STRA is not subject to the annual day limits that apply to some forms of non-hosted STRA.

Non-hosted STRA

Non-hosted STRA generally applies where the host does not reside on the premises while the accommodation is being provided.

Depending on the location of the property, non-hosted STRA may be subject to annual day limits.

In many parts of Greater Sydney, as well as certain other NSW locations, non-hosted STRA is limited to 180 days in any 365-day period under the exempt development pathway.

Different rules apply in some areas. For example, non-hosted STRA in much of the Byron Shire is subject to a 60-day annual limit, subject to specific mapped exceptions.

Bookings of 21 consecutive days or more may also be treated differently under the planning framework.

Because planning rules can depend on the location of the property, hosts and owners corporations should check the current NSW Government requirements and any applicable local planning controls.

The NSW STRA Code of Conduct

A mandatory Code of Conduct for the Short-term Rental Accommodation Industry applies to participants in the NSW STRA industry.

The Code applies to:

  • Hosts
  • Guests
  • Letting agents and facilitators
  • Booking platforms

The Code establishes minimum standards of behaviour and obligations for participants in the industry.

NSW Fair Trading can take action where the Code is breached. Depending on the circumstances, disciplinary action may include warnings, directions, monetary penalties and strikes.

Serious or repeated breaches may also result in a host, guest or particular premises being recorded on the STRA Exclusion Register.

What is the STRA Exclusion Register?

NSW Fair Trading administers an Exclusion Register for short-term rental accommodation participants.

The register may include:

  • Hosts who are excluded from offering STRA
  • Hosts who are excluded in relation to particular premises
  • Guests who are excluded from entering into STRA arrangements

The purpose of the register is to prevent participants who have been excluded from the industry from continuing to participate in short-term rental accommodation arrangements.

How does someone end up on the Exclusion Register?

Under the NSW STRA Code of Conduct, a host or guest may receive a strike for serious breaches of the Code.

Generally, where two strikes are recorded against a participant within a two-year period, NSW Fair Trading may record the host, guest or relevant premises on the Exclusion Register.

NSW Fair Trading also has other disciplinary powers under the STRA regulatory framework, depending on the circumstances.

The Code includes processes that must be followed before disciplinary action is taken, including review and appeal rights in relevant circumstances.

How long is the exclusion register ban?

Anyone listed on the exclusion register is banned from STRA for five years.

A host, guest or premises recorded on the Exclusion Register may be excluded for five years.

The effect of an exclusion depends on how the participant or premises has been recorded. For example, a host may be excluded entirely from acting as a host, or an exclusion may relate to particular premises.

What are letting agents required to do?

Letting agents and facilitators have obligations under the STRA Code of Conduct in relation to excluded participants.

In particular, they must not advertise, offer or otherwise facilitate STRA arrangements where:

  • The host is recorded as an excluded host.
  • Particular premises are recorded as excluded premises.
  • The guest is recorded as an excluded guest.

Letting agents also have record-keeping obligations in relation to STRA transactions.

Booking platforms and other facilitators have their own obligations under the Code and the NSW STRA framework.

What can strata schemes do about Airbnb and short-term rentals?

Strata schemes experiencing problems associated with short-term rental accommodation should first consider which issue is actually causing the concern.

Depending on the circumstances, relevant issues may include:

  • Whether the STRA use is permitted under the scheme’s by-laws.
  • Noise and nuisance.
  • Parking on common property.
  • Overcrowding.
  • Fire safety.
  • Planning compliance.
  • Damage to common property.
  • Behaviour of guests and visitors.

A carefully drafted strata bylaw may assist an owners corporation to manage some of these issues. However, the ability to prohibit STRA is subject to the limitations in section 137A of the Strata Schemes Management Act 2015.

Other concerns may need to be addressed through existing bylaws, NSW Fair Trading, the local council or NSW Police, depending on the nature of the problem.

For example, local councils are generally responsible for enforcing planning and fire safety requirements, while urgent noise or criminal matters may need to be referred to NSW Police.

Do strata bylaws override NSW STRA rules?

No. STRA compliance involves more than simply checking whether a strata scheme permits short-term rentals.

A host may need to comply with:

  • NSW planning requirements.
  • STRA registration requirements.
  • Fire and safety standards.
  • The NSW STRA Code of Conduct.
  • Applicable strata by-laws.
  • Any relevant development consent conditions.
  • Other legal requirements that apply to the property.

Similarly, the existence of an STRA registration does not necessarily mean that a property can be used for STRA in breach of a valid strata bylaw or another applicable legal restriction.

How to use the exclusion register

You can access the public register to check for excluded hosts and guests from STRA via the NSW Fair Trading website. You can search the register using the person’s name along with:

  • Email address.
  • Phone number.
  • Residential address.

Keeping up to date with these details can be difficult, especially if a letting agency deals with many short-term rental accommodation providers. However, licensed letting agents can be easily informed of changes to the exclusion register when subscribed to NSW Fair Trading updates via the NSW Fair Trading website.

If you are not subscribed to receive notifications, it is your responsibility to check the exclusion register before each booking to make sure you are not entering into a STRA arrangement with an excluded host or guest.

How to subscribe to the exclusion register

  • Visit the subscriber portal and sign up as a new user and enter your Agent License Number to subscribe to updates on changes to the exclusion register.
  • When changes are made to the exclusion register, you will receive a notification.
  • Once subscribed, you can accept bookings without checking the register, unless you receive a notification from NSW Fair Trading.

What to do when changes are made to the exclusion register?

If the exclusion register has changed, you will receive a notification.

  • Login to the subscriber portal.
  • Review the information on excluded participants.
  • If the host is recorded as banned on the exclusion register, you must not list or offer this premises for STRA.
  • If the guest is recorded on the exclusion register, you must not enter into a STRA agreement with them.

Need advice about STRA or strata bylaws?

Short-term rental accommodation can create complex issues for strata owners corporations, committees, investors, owner-occupiers and managing agents.

If your strata scheme is considering restrictions on Airbnb or other short-term rentals, it is important to review the scheme’s existing by-laws and consider whether any proposed changes are consistent with current NSW strata legislation.

For information about the current NSW STRA framework, registration requirements and the Code of Conduct, visit the NSW Government’s short-term rental accommodation information pages.

You can also read more about strata bylaws and how they can be changed on the NSW Government website.To learn more about the exclusion register or to access the register or the Code of Conduct, you can visit NSW Fair Trading.

For a legal perspective, reference Bannermans Lawyers for their Short Term Rental Accommodation Legislative Regime in NSW in this article.