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New NSW strata laws increase fines for unauthorised Airbnb by 500%

By Monica Boyd

Will short-term letting be something of the past?

Owners and tenants worried about the influx of short-term stays due to sites like Airbnb should be aware that this type of tenancy is not always legal, and there are ways to ensure owners’ and tenants’ rights are not being ignored, according to the PICA Group.

Greg Nash, managing director and group CEO at the PICA Group said, “We have heard from a number of owners and tenants who are worried that an increase in short stays such as those facilitated Airbnb will create security and compliance risks in their buildings. This is particularly relevant at peak holiday periods such as Schoolies and the upcoming Christmas and New Year season, where people may be looking to rent out or sublet their properties for short stays.

“The fear is around having a revolving parade of unknown short-term tenants in a building can make long-term tenants feel unsafe or potentially create a nuisance. While the majority of short-term guests are undoubtedly perfectly-behaved, there is always a risk of damage to common areas and undesirable behaviour from short-term guests.”

In a hotel or resort, there are provisions in place to protect the business. For example, the building would have been constructed according to different requirements such as wider hallways and different fire safety regulations. Equally, the materials used in common areas would have been selected based on their durability. And, finally, the hotel or resort would be fully insured against damage caused by guests.

By contrast, a residential building would have none of these things and, crucially, residential insurance will likely be void if the property is used for short-term stays.

In some cases the owners corporation can allow short-term stays. For example, if the zoning and the local environment plan (LEP) don’t prohibit it, then offering short-term stays can be possible with development consent, depending on the by-laws.

Owners corporations can allow short-term stays and can include specific requirements within the by-laws to minimise the potential risk. For example, they may demand a tenancy notice for each and every new guest, along with how long they will be staying. If owners don’t comply then the owners corporation can refuse to issue security keys, prevent guests from using the facilities and more.

Greg Nash said, “The bottom line is that an owners corporation cannot have something like Airbnb forced upon them. The person wanting to run the Airbnb must satisfy any number of legal requirements first and, even then, the owners corporation has a right to put a stop to it through the by-laws.

“If a person in a building is running an Airbnb illegally, many councils are happy to prosecute as they are empowered to enforce zoning and local environmental plan (LEP) requirements. Additionally, if the person is in breach of a by-law limiting occupancy, they can be subject to fines of $5,500 for the first offence and up to $11,000 for a second offence with the money going to the owners corporation, not the state.”

as seen on www.therealestateconversation.com

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