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New short term letting laws are here

The NSW Government have passed the long-awaited legislative changes to the way we view short term letting arrangements, which commened on 10 April 2020.

Basically, if an Owners Corporation wants short term letting in their strata scheme, they will need to set up some ground rules and lot owners will need to comply with the new Code of Conduct (which has not yet been released).

If an Owners Corporation does not want short term letting in their strata scheme, they have the right to pass a by-law prohibiting it.

There is an ‘opt-out’ clause and by right you have the power to make a by-law prohibiting it. However any opt-out does not include a person’s place of residence where they have short term letting, such as renting out a room.

What is short term rental accommodation?

‘Short-term rental accommodation arrangement’ will mean ‘a commercial arrangement for giving a person the right to occupy residential premises for a period of not more than 3 months at any one time, and includes any arrangement prescribed by the regulations to be a short-term rental accommodation arrangement (nothing in there yet), but does not include any arrangement prescribed by the regulations not to be a short-term rental accommodation arrangement.’

If you rent your apartment, villa or townhouse for less than 3 months then you are captured by the definition above. If a rental is for more than 3 months then it is considered a normal residential lease.

The exemption is where it is the owners principle place of residence and they rent rooms out.

Places not covered under this arrangement include tourist and visitor accommodation, registrable boarding houses, holiday parks, refuge or crisis accommodation (provided or funded by a government body) or disability accommodation because these have their own legislation.

Owners Corporations to consider potential short term letting issues

Strata schemes wanting to take advantage of the opt-out cause need to be mindful that decision may be challenged at the NSW Civil & Administrative Tribunal as being harsh, unconscionable or oppressive.

When making their decision the Owners Corporation must consider the impact short term letting may have on the Owners Corporation as a whole, including the lot concerned.

Stating you just don’t want it in your strata scheme won’t cut it at the tribunal.

But if you do want to allow short term letting, things to consider include whether town planning consent is required and whether the lot owner be able to comply with the Code of Conduct under the new provisions.

Additional considerations to take into account include cost implications to the Owners Corporation and/or lot owner such as fire safety upgrades, security or car parking requirements.

These changes are new, and whilst there has been some direction provided regarding these changes, Owners Corporations will need to be very careful on the impact to their strata scheme should they chose to allow these arrangements.

Should you require further information, please contact your Strata Community Manager for more details.

Ref: Grace Lawyers
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