Fair Trading Amendment (Short –term Rental Accommodation) Act 2018
The New South Wales short-term holiday letting industry is estimated to be worth $15 billion to the Australian economy. The popularity of short-term rental accommodation has increased concerns regarding anti-social and irresponsible behaviour of guests. To overcome these concerns, the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW) makes significant changes to both the Fair Trading Act 1987 (NSW) and the Strata Schemes Management Act 2015 (NSW). These amendments aim to strike a balance between supporting innovation and local economies and considering those adversely affected by the industry, in particular, neighbours.
Amendments to the Fair Trading Act 1987 (NSW)
Amendments to the Fair Trading Act 1987 (NSW) define a short-term accommodation agreement as a commercial arrangement for the right to occupy a residential premises (or part thereof) for a period of no more than three months at any one time. The amendments aim to implement a tough new mandatory code of conduct for short-term rental accommodation that will apply to online booking platforms, letting agents, property managers, hosts and guests.
The code will establish a complaints system. This will allow adversely affected parties such as neighbours of short-term rental accommodation, strata committees and owner’s corporations to make complaints regarding either the host or their guests. Independent adjudicators approved by NSW Fair Trading will assess complaints and importantly, if a host or guest is found to have committed a serious breach of the code more than once in a two-year period, the guest or host will be listed on an exclusion register. If a guest or host is placed on the exclusion register, online booking platforms and letting agencies must remove them from their service.
Contravention of a code of conduct may result in both civil and criminal penalties. Breaching an offence provision of the code carries a maximum penalty of 1000 penalty units (currently $110,000) for corporations and 200 penalty units (currently $22,000) in any other case.
Amendments to the Strata Schemes Management Act 2015 (NSW)
Currently, there is some uncertainty as to whether by-laws can be adopted to prohibit the use of a lot for short-term rental accommodation. Upon commencement of the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 (NSW), by-laws may be made by special resolution to prohibit a lot being used for the purpose of short-term rental accommodation if that lot is not the principal place of residence of the person who is giving the right of occupation. A by-law has no force or effect on a person who enters into a short-term rental accommodation arrangement if the lot is that individual’s principal place of residence.
Commencement
The Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 has been passed by both houses of parliament and has received Royal Assent. The Act is to commence upon proclamation, although the date of proclamation is yet to be announced.
If you would like to discuss the implications of the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018, for example the adjustment of by-laws to prohibit an investor owned lot from being used for short-term rental accommodation, please contact our office.