A lot has changed in the short-term accommodation market over the past decade. The industry has evolved rapidly with an avalanche of new players joining traditional providers. Along with that evolution has come changing community expectations and the need for law makers to keep pace.
Ten years ago, when you thought about the short-term accommodation market in Australia, chances are your thoughts turned to holiday lets in beachside or forest-type settings. Maybe you’d include serviced apartments in the cities for tourists staying longer, particularly if you’d used one in Europe yourself. And if you were up with the industry happenings, you might also add corporate leasing into the mix.
By and large, short-term accommodation meant an investment property purchased to be rented to holidaymakers, tourists or expats. Renting out a room in your house, well that was boarding or lodging. And offering a bed and breakfast (B&B), that was an offshoot of the hotel/motel industry.
Enter Airbnb. Started in California in August 2008, Airbnb officially launched in Australia four years later (August 2012) and started a short-term accommodation revolution. Within five years, there were around 138,000 active Airbnb listings in Australia welcoming over five million guests across the country – and earning hosts an average of $5,200 in supplemental income (according to an Airbnb submission to the Australian Government in 2017). The number of host properties has grown exponentially, and it is now estimated that more than four per cent of Australian housing stock is, or has been, used as an Airbnb.
Joined by the likes of Stayz, HomeAway, Flipkey, Homestay, Home Exchange, Tripping, VRBO and more than a dozen others, Airbnb made anyone with a roof over their heads a potential landlord.
Suddenly having paying guests come to stay was on the cards. Whether they rented a single room or the whole home, stayed for a night or for a couple of months, just about anyone (notwithstanding issues with renters subleasing) was able to earn some income from the sharing economy. In addition to owner-occupiers looking to cash in, many landlords who had traditionally leased their properties for fixed terms quickly discovered how lucrative it could be to offer accommodation through these platforms instead and switched to the short-term arena. For the record: EBM RentCover has been catering to the short-term accommodation market since 2007 and was one of the first (and still one of the few) landlord insurers to offer cover for Airbnb properties.
The arrival of the share economy accommodation platform certainly disrupted rental markets across Australia. It also caused disruption in neighbourhoods and particularly apartment blocks. Where once the purview of owner-occupiers, the quiet suburbs and unit complexes became hotbeds for short-term trippers. Complaints from neighbours were rife as residential homes became quasi-hotels with a constant stream of, sometimes badly behaved, guests, and event venues hosting wild parties.
Local councils found themselves dealing with ‘party pads’ and local laws were soon introduced in many municipalities regulating the short-term industry. Registration, permits and licences were some of the control measures introduced. Some forms of short-term bookings were prohibited and enforcement included fines or other penalties.
Facing community backlash, the platforms themselves were also required to act, instigating strict codes of conduct and requirements, manually screening ‘high-risk reservations’ and cracking down on those who flaunted the rules. In October this year, more than 400 Airbnb listings across Australia were suspended or removed from the platform as part of a nationwide crackdown on party houses.
Almost since the first day the platforms arrived in the country, calls began for the short-stay industry to be regulated. State and territory governments have responded by investigating and introducing legislation in their jurisdictions, and it is important landlords know their rights.
Changes to short-term accomodation legislation
Australian Capital Territory
In 2018 the Territory Government said it had considered the regulatory settings that apply to short-term rental accommodation, such as Airbnb, and were not proposing any new regulatory framework. To date, this position has not changed.
New South Wales
Following an inquiry into home-sharing services, such as Airbnb, the State Government is implementing a new regulatory framework for short-term rental accommodation (STRA) which includes:
- a state-wide planning framework – the draft planning instrument will introduce a new definition of STRA and new ‘exempt’ and ‘complying’ approval pathways that enable STRA within day limits
- a mandatory Code of Conduct – comes into effect on 18 December 2020 and includes an exclusion register which will see a ‘two strikes and you’re out’ policy put in place for unruly guests
- changes to strata legislation – came into effect on 10 April 2020 with amendments to the Fair-Trading Act 1987, Strata Schemes Management Act 2015 and the Residential Tenancies Act 2010 allowing owners’ corporations to pass by-laws that prohibit short-term rental accommodation within strata schemes but only in lots that are not a host’s principal place of residence
- introduction of a premises register – from 1 June 2021, both premises and hosts will be required to be registered.
The Northern Territory Government has not announced any reforms or legislation for the short-stay accommodation sector.
After local councils called for state-wide regulation of the short-stay accommodation sector, a State Government-appointed industry reference group was set up, in 2018, to look at a framework for home-sharing. The group recommended a code of conduct and a system of data-sharing so councils knew where short-term lets were located. To date, no further progress has been announced.
Following calls from local councils for short-stay accommodation to be regulated, in late 2019, the Opposition called for a state-wide mandatory registration system and a code of conduct (backed by civil penalties to ensure compliance) for all listed short-term holiday rentals. The Short Term Holiday Rental Accommodation Bill 2019 was drafted for comment, but does not appear to have progressed.
The Short Stay Accommodation Act 2019 came into effect on 4 June 2019. Under the Act, booking platforms are required to collect and display certain information about the properties they have listed. This information must also be reported to the Director of Building Control each quarter. This provides addresses and permit-related information to councils so they can determine compliance with short stay accommodation regulations in their area.
Changes to the Owners Corporations Act 2006 were introduced in February 2019 to help prevent short-term accommodation apartment buildings being used to host unruly parties. The reforms allow owners corporations and residents to take action against owners and guests, who are now jointly and individually liable for any compensation, fines, and awards for damage to common property. Fines of up to $11,000 may be imposed by VCAT for a range of breaches including creating unreasonable noise or behaving badly; causing a health, safety or security hazard; damaging common property; and obstructing a resident from using their property.
Following the 2019 Parliamentary Inquiry Levelling the Playing Field – Managing the rapid increase of Short-Term Rentals in Western Australia, the State Government announced its intention to regulate short-stay accommodation. A registration scheme for short-term accommodation providers is being considered and, subject to approval, it could be put in place in 2021.
It is important for landlords and agents to be aware of the legislation, rules and regulations related to short-stay accommodation in the jurisdiction where the property is located. If a policyholder needs to claim on their short-term insurance, having adhered to the legislation and regulations (or not) may impact the outcome. If you need more info or want to chat to an EBM RentCover team member about cover or claims, call 1800 661 662.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.
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