Renting Your NSW Strata Apartment on Airbnb: Complete Guide + Free Eligibility Checker

Introduction

Renting out a strata property on Airbnb in New South Wales offers a valuable opportunity for owners to generate income, but it comes with a unique set of legal and regulatory requirements. Understanding the rules around short-term rental accommodation, including the role of strata by-laws and government regulations, is essential for any landlord considering this option.

This guide provides clear, practical information to help strata landlords navigate the complexities of short-term letting. By staying informed and compliant, owners can make the most of their property while avoiding common pitfalls and ensuring a smooth rental experience for all parties involved.

Interactive Tool: Can I Host on Airbnb?

Understanding Short-Term Rental Accommodation in a Strata Context

Defining Short-Term Rentals for Your Strata Property

In New South Wales, short-term rental accommodation (STRA) refers to a commercial arrangement where a person is given the right to occupy a residential property for a period of three months or less. This definition is established under Section 54A of The Fair Trading Act 1987 (NSW) and typically covers lettings facilitated through platforms such as Airbnb, Stayz, or Booking.com.

It is important to note that these laws are specifically focused on commercial holiday letting and do not apply to:

• Traditional residential tenancies
• Other forms of accommodation, such as hotels, motels, or boarding houses

Understanding this distinction is the first step for any strata owner considering entering the short-term rental market.

Hosted vs Non-Hosted Strata Rentals

Short-term rental arrangements within a strata scheme are generally classified into two distinct categories, each governed by different rules. The primary difference between them is whether the owner or host is living at the property during the guest’s stay.

• Non-Hosted Accommodation: In this arrangement, the guest has exclusive use of the entire property, and the host does not live on-site. Examples include leasing your entire strata apartment while you reside elsewhere or renting out an investment unit that is managed by a third party. The key characteristic here is the guest’s exclusive use of the property without the host being present.
• Hosted Accommodation: This occurs when the host remains on the premises while the guest is staying. For example, you might let out a spare room in your strata apartment while you continue to live there, or rent out a granny flat on the same property. The defining feature is your physical presence throughout the rental period.

The Power of Your Owners Corporation & Strata By-Laws

Can Your Strata Scheme Prohibit Short-Term Rentals

An owners corporation has significant authority to regulate short-term rental accommodation (STRA) within a strata scheme, and navigating these powers is a key area of legal advice for an owners corporation. Under Section 137A of the Strata Schemes Management Act 2015 (NSW), a by-law can be passed by special resolution to prohibit short-term rentals in lots that are not the host’s principal place of residence:

• If you own a strata property as an investment or holiday home, the owners corporation can legally prevent you from listing it on platforms like Airbnb.
• However, the law provides a key protection for owner-occupiers. If the strata lot is your main home, the owners corporation cannot pass a by-law that completely bans you from offering it for short-term stays.

How Strata By-Laws Can Regulate Occupancy & Use

Beyond outright prohibition, strata by-laws can be used to manage the impact of short-term rentals on the building and its residents. One of the most direct methods is adopting an occupancy limit of two adults per bedroom.

Additionally, by-laws can regulate other aspects of guest behaviour to maintain harmony within the strata community. These rules can cover areas such as:

• Parking restrictions on common property
• Proper disposal of garbage
• Noise levels and general conduct
• Ensuring guests do not obstruct common areas

Case Study: Estens v Owners Corporation SP 11825

The current legal framework was heavily influenced by the 2017 case of Estens v Owners Corporation SP 11825 [2017] NSWCATCD 52. In this matter, a lot owner successfully rented her unit through Airbnb until the owners corporation passed a special by-law to ban all short-term letting in the building following resident complaints.

The owner challenged the by-law, initiating a strata dispute in the New South Wales Civil and Administrative Tribunal (NCAT). The Tribunal found that the by-law was invalid because, at the time, it restricted a legal “dealing” with property, a power the owners corporation did not possess under existing legislation.

This ruling highlighted a gap in strata law and directly led to the introduction of Section 137A of the Strata Schemes Management Act 2015 (NSW), which now explicitly grants owners corporations the power to prohibit STRA in non-principal places of residence.

Key NSW Government Regulations for Strata Landlords

Understanding the 180-Day Cap for Non-Hosted Rentals

The number of days you can offer your strata property for short-term rental depends on your living arrangements.

If the property is not your principal place of residence, a cap of 180 days per year applies in certain local government areas, including Greater Sydney. This limit aims to balance the availability of housing for long-term residents.

However, any single booking of 21 consecutive days or more does not contribute to the 180-day total. Some areas impose stricter limits; for instance, the Byron Shire local government area reduces this cap to 60 days per year.

Permitted Locations for Short-Term Strata Rentals

Under the State Environmental Planning Policy (Housing) 2021 (NSW), short-term rentals are allowed only in specific locations. Before listing your strata property, you must confirm it sits within one of these prescribed areas:

• Greater Sydney region (excluding the Central Coast local government area)
• Ballina local government area
• Byron Shire local government area
• Designated land within the Clarence Valley local government area
• Designated land within the Muswellbrook local government area

The Role of Local Council Rules

While state-level regulations establish a baseline framework, local councils can introduce additional rules. Even if your strata property is in a permitted area, you must still check for specific local requirements.

For example, councils in high-demand areas like the City of Sydney have advocated for stricter enforcement to address housing affordability and availability. Therefore, it is essential to contact your local council to clarify any further zoning, registration, or usage rules that may apply to your strata property.

Your Obligations Under the NSW Code of Conduct

Key Host Responsibilities & Requirements

The NSW Government has established a mandatory Code of Conduct for the Short-term Rental Accommodation Industry that applies to all participants, including hosts, guests, and booking platforms. As a strata landlord offering your property on a platform like Airbnb, you are considered a host and must adhere to several key obligations. These standards are designed to ensure safety, transparency, and accountability.

Your primary responsibilities under the Code include:

• Maintaining adequate insurance by holding a valid policy that covers your liability for third-party injury and death.
• Ensuring the property meets standards by keeping it clean, safe, and accurately represented in any advertisements or listings.
• Providing emergency contact details so guests have clear information for emergencies that may arise during their stay.
• Notifying guests of potential hazards or risks associated with the strata property.
• Responding to guest complaints in a timely and appropriate manner.
• Registering your strata property on the government’s short-term rental accommodation register before offering it for rent.

Penalties for Non-Compliance with the Code

Failure to comply with the Code of Conduct can result in disciplinary action from NSW Fair Trading. The enforcement measures are designed to address serious or repeated breaches and maintain standards across the industry.

NSW Fair Trading has the authority to take several actions against a non-compliant host, including:

• Issuing warnings and directions, such as formal warnings or directions to take specific actions to rectify a breach.
• Levying monetary penalties in the form of fines for violations of the Code.
• Recording a ‘strike’ against a host or their property for serious infringements.
• Listing on the Exclusion Register, which occurs if a host receives two serious strikes within a two-year period, resulting in a five-year ban from the short-term rental industry in NSW.

Navigating Risks & Tenant Responsibilities in Your Strata Property

Understanding Airbnb Arbitrage & Its Financial Risks

Airbnb arbitrage occurs when a tenant rents a property and then sublets it on short-term platforms at a higher nightly rate. While the tenant may profit, this strategy exposes the strata owner to legal and financial pitfalls that can ripple through the entire community.

Owners can be exposed to several potential issues, including:

• Increased liability: A steady stream of guests raises the likelihood of damage to common areas or disturbances, potentially sparking strata disputes and legal action from the owners corporation.
• Insurance complications: Standard landlord or building policies often exclude incidents tied to short-term letting, forcing owners to seek specialised cover.
• Impact on building value: Frequent guest turnover can harm the building’s reputation and deter stability-minded buyers or long-term tenants, ultimately affecting property values.
• Penalties and compliance costs: When a tenant’s short-term activity breaches strata by-laws, the owner usually shoulders any resulting fines or compliance expenses.

Can Your Tenant Legally Sublet on Airbnb

A tenant cannot legally sublet a strata property on Airbnb without first reviewing their lease and obtaining the landlord’s written consent. Many residential tenancy agreements explicitly bar full-premises subletting unless approval is granted, and ignoring this requirement constitutes a serious breach.

The decision in Abdel-Messih v Azzi [2017] NSWCATAP 86 underscores the consequences of unauthorised subletting. In that case, the tenant listed a Sydney CBD apartment on Airbnb soon after moving in, violating a clause that demanded the landlord’s written permission. The landlord issued termination notices, and NCAT upheld the termination because the breach exposed the landlord to unaccepted risks.

A Compliance Checklist for Your Strata Rental

Registering Your Strata Property & Ensuring Fire Safety

Before you can advertise your strata property on any short-term rental platform, you must complete two critical compliance steps:

1. Register the property on the NSW Department of Planning, Industry and Environment’s Short-Term Rental Accommodation (STRA) register and pay all associated fees.
2. Verify fire safety compliance by ensuring your property meets all applicable standards and holds a current fire safety certificate or statement.

These measures must be in place before you host any guests to safeguard their wellbeing and to satisfy state regulations.

Reviewing By-Laws Insurance & Lease Agreements

To protect your investment and ensure you are operating within the rules, it is essential to conduct a thorough review of your legal and administrative arrangements. This process helps you avoid potential fines, disputes and liability issues that can arise from short-term letting in a strata scheme.

Key documents and policies to check include:

• Strata by-laws: Carefully examine your building’s by-laws to understand any specific rules or restrictions that apply to short-term rentals, especially for properties that are not a host’s principal place of residence.
• Adequate insurance: Under the Code of Conduct you must hold a valid insurance policy covering liability for third-party injury and death. Standard landlord or home policies often exclude short-term rental activity, so specialised coverage may be required.
• Lease agreements: If you have a long-term tenant, ensure the lease contains clear terms about short-term letting, outlines any building-specific restrictions and sets consequences for unauthorised subletting to prevent issues such as Airbnb arbitrage.

Conclusion

Renting your strata apartment on platforms like Airbnb in NSW is a viable option, but it requires careful adherence to a complex regulatory landscape. Success depends on navigating owners corporation by-laws, state-wide rules like day limits, and the mandatory Code of Conduct to ensure compliance and avoid penalties.

Given the intricate nature of these regulations, seeking professional advice is a prudent step to protect your investment. For expert guidance on your rights and responsibilities, contact PBL Law Group today to ensure you meet all your obligations as a strata landlord.

Frequently Asked Questions