Introduction

Platforms such as Airbnb catch the eye of many strata property owners, sparking curiosity about listing their spaces. Perhaps you’ve been mulling over the idea of renting out that spare bedroom, or maybe you’re planning a trip and see the chance to make some cash from your apartment while you’re off exploring the world.

The allure of short-term rentals isn’t just about financial gains; it also contributes to community vibrancy by accommodating visitors. But, as with all good things, there’s a flip side. The occasional disruptive behaviour from temporary tenants can disturb the peace in residential communities. To address this and strike a harmonious balance, the NSW government has rolled out specific rules. Strata owners can now rent their homes for short periods, up to three months. This new framework incorporates a Code of Conduct, a centralized registration system for short-term rentals, state-wide planning guidelines, and strata scheme by-laws that can limit or entirely prohibit such rentals.

If you’re a strata owner considering this venture, this article will guide you through the essentials.

What is short term rental accommodation?

For strata owners contemplating listing their property on platforms like Airbnb for durations under three months, understanding the nuances and legalities of short-term rentals is crucial. Simply put, short-term rental accommodation is the commercial lease of a legally constructed dwelling for periods less than three months. Such arrangements typically fall into two categories:

1. hosted rental accommodation, where the owner is present during the guest’s stay, and
2. non-hosted rental accommodation, where the property is entirely at the guest’s disposal.

1. What is ‘hosted’ rental accommodation?

When we talk about hosted short-term rental accommodation, we’re referring to situations where the host or landlord is residing on the same premises as the tenant during their stay. For instance, if you’re letting out a section of your strata property on Airbnb while you’re still living in another part, this qualifies as hosted rental accommodation.

The term ‘hosted’ isn’t limited to sharing the same unit or apartment. If you, as a strata owner, live on the property but rent out a distinct space, such as a granny flat, on Airbnb, it’s still deemed as hosted rental accommodation. In essence, your physical presence on the property during the tenant’s rental period is the defining factor.

2. What is ‘non-hosted’ rental accommodation?

Non-hosted short-term rentals refer to instances where the host or landlord isn’t sharing the same premises with the guest during their stay. Common examples include individual units within a property that has an on-site manager or concierge. So, if you, as a strata owner, have your primary residence elsewhere and decide to lease your strata apartment on Airbnb, this setup is categorized as non-hosted rental accommodation. Simply put, it’s the absence of the property owner’s presence during the guest’s occupancy that differentiates this arrangement.

Can you rent your apartment in a strata property on Airbnb for a short-term?

Can you rent our your strata apartment for a short-term on Airbnb? Well, yes you can! All legally constructed dwellings that are allowed to be used as ‘residential accommodation’ in all land-use zones can be let our for short-term rentals. Some general requirements for letting out your dwelling are summarised below:

• The dwelling must comprise or be part of a residential accommodation.
• It should not be a boarding house, group home, hostel, rural workers’ dwelling, seniors housing, or co-living housing. It must also not be, or be part of, a refuge or crisis accommodation provided by a public or local authority, or any other body wholly or partly funded by the government.
• The dwelling must be permitted with or without development consent on the land on which it is located.
• The dwelling must be registered under the Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021. Additionally, it must either have a current fire safety certificate or fire safety statement, or no fire safety measures are currently implemented, required or proposed for the property. 
• The dwelling should not be moveable in nature, like an RV or trailer home.
• The purpose of short-term rental accommodation should be lawful in nature. 

Your strata apartment likely already ticks all the above. Nonetheless, before you decide to put up your apartment on Airbnb, you should consider contacting your local council for development consent information and go through the by-laws formed by your owners corporation.

Can the owners corporation restrict or prohibit short-term rental of your strata property?

As per Section 137A of the Strata Scheme Management Act 2015, owners corporation is empowered to adopt by-laws regulating and limiting short-term rental accommodation in their strata property. It can also ban short-term stays in lots which are not the host’s principal place of residence. But, if your strata apartment is your principal place of residence, you can rent it out for short-term while you live there, or are temporarily away. In this scenario, the owners corporation will not be able to place a complete ban on short-term rentals.  

Before Section 137A was introduced, the legal position on the owners corporation’s powers to regulate short-term rentals was somewhat dicey. In Estens vs Owners Corporation SP 11825 [2017] NSWCATCD 52, the NSW Civil and Administrative Tribunal invalidated a by-law that prohibited illegal uses of the strata property, including short-term letting, stating that the owners corporation did not have powers to make such a by-law.

There is no other case law in NSW that directly settles this issue, but other courts in similar jurisdictions have upheld the owners corporation’s powers in this regard. In O’Connor (Senior) and others v The Proprietors, Strata Plan No. 51 (Turks and Caicos Islands) [2017] UKPC 45, the Privy Council held that a by-law banning short-term letting was valid as per a legal provision which is largely similar to the law applicable in NSW.

It should be noted that Section 137A came into force from 10 April 2020. If the owners corporation of your strata property has made a by-law restricting short-term rentals before this date, the by-law still needs to be in line with Section 137A. Any portion of the by-law that runs counter to Section 137A is no longer legally valid.

For how many days can short-term tenants use your property?

The number of days for which you can rent out your apartment to an Airbnb guest depends upon if you live in the same property or premises. 

Hosted-short term rental accommodation can be rented throughout the year. However, non-hosted accommodation can be rented on a short-term basis for a maximum of 180 days in a year. When calculating the number of days your strata apartment is being used as a non-hosted rental accommodation, you do not have to include a period of 21 consecutive days or more during which the apartment was let out to the same person.

Where does your strata apartment need to be located to rent using Airbnb?

The State Environmental Planning Policy (Housing) 2021 lists areas in which dwellings can be let out for short-term stays. The prescribed areas are:

• The Greater Sydney region, other than the region comprising the Central Coast local government area.
• Ballina local government area.
• Byron Shire local government area.
• Land in the Clarence Valley local government area shown edged heavy black on the Clarence Valley Short-term Rental Accommodation Area Map.
• Land in the Muswellbrook local government area shown edged heavy black on the Muswellbrook Short-term Rental Accommodation Area Map.

If your strata apartment is located in any of the above areas, you are eligible to let it out on Airbnb for short-term stays if all the other requirements are met. 

Are there any compliance requirements to rent out your property as an Airbnb?

Want to rent your strata apartment for short-term stays on platforms like Airbnb? Before you do so, make sure to register your strata apartment on the Department of Planning, Industry and Environment’s STRA register and pay the required fees. Your strata apartment must be registered before you advertise or offer it for short-term rentals on platforms like Airbnb. Also, ensure that your strata property complies with the fire and safety requirements. 

Code of Conduct for the Short-term Rental Accommodation Industry 

The NSW government’s new Code of Conduct for the Short-term Rental Accommodation Industry (the Code) applies to all short-term rental accommodation industry participants. It lays down mandatory obligations for stays for periods of 3 months or less for all the industry participants, including booking platforms, letting agents, hosts, guests and facilitators. As the owner of a strata property who wants to rent their place on Airbnb, you are considered as a ‘host’. Below are the your main obligations under this Code:

• Holding insurance that covers your liability for third-party injuries and death.
• Ensuring the property is of the standard advertised.
• Ensuring that the property is clean and safe for guests.
• Providing guests with a point of contact for emergencies.
• Notifying guests of any potential risks associated with the property.
• Responding to complaints from strata renters in a timely and appropriate manner.
• Notifying guests of any changes to the booking or property.
• Registering the property and owner on the short-term rental accommodation premises register, and complying with all other applicable laws and regulations. 

Are there any penalties for not complying with the applicable laws?

The Code sets out disciplinary actions and penalties if the strata landlord does not comply with the applicable laws. If you rent out an apartment for short term stay and are found in breach of the applicable laws, the NSW Fair Trading is empowered to impose the following penalties:

• Issue warnings or directions to take or cease certain action.
• Levy a monetary penalty.
• Mark a ‘strike’ against a host, host’s premises, or guest for serious breaches of the Code.
• Record a guest, host or host’s premises on the Exclusion Register, which excludes the participant from the industry for five years for committing two serious ‘strikes’ in a two-year period. A host or a guest can also be recorded on the Exclusion Register if they have been charged with a criminal offence and it is in the public interest to exclude the person until the criminal proceedings come to an end. If the person is found guilty, they can be recorded on the Exclusion Register for a specified period or indefinitely.

The Code lays down a fair procedure that must be followed before any adverse action is taken against the strata property owner. It also provides for appeals against any penalties imposed for breach of the applicable laws. 

Wrapping It Up: Airbnb and Your Strata Apartment

So, while you’re legally cleared to list your strata apartment on Airbnb, there’s more to the process than meets the eye. It’s not just about hitting the ‘list’ button; you need to navigate a maze of legal and compliance steps. Seeking expert guidance can make all the difference, helping you avoid potential pitfalls. At PBL Law Group, our team is well-versed in strata law, ready to support apartment owners, property managers, and owners corporations navigate short-term rentals in strata schemes.