So…Short-Term-Letting – Illegal or not? - More Than Strata

So…Short-Term-Letting – Illegal or not?

You’d be forgiven right now for either:

  • Being completely unaware that new laws are commencing in relation to short term letting; or
  • Having no idea what the new laws mean.

Let us help you break it down.

On 10 April 2020 the Strata Schemes Management Act 2015 will have a new clause 137A, allowing an Owners Corporation to make a by-law which prohibits short term letting for a lot that is not a primary residence.

 What does this legislation mean?

Owner-Occupiers, and tenants (subject to their tenancy agreements) could still short term let, say a second bedroom, even if a by-law were passed to prohibit short term letting. Perhaps not ideal, but arguably a decent-ish compromise.

However… coinciding with this change in legislation was to be the Fair Trading Amendment (Short-term Rental Accommodation) Act.

This new legislation, among other things, introduced a much-anticipated code of conduct, for both landlords and tenants, and most significantly, placed Fair Trading and not the Owners Corporation in the position of enforcement.  BUT that legislation is no longer commencing on 10 April 2020, when the Strata Schemes Management Act amendments do.

So now what?

On 6 April 2020 ALL short-term-letting was banned under emergency powers bestowed on the NSW Government, in effect during the Covid-19 crisis.

Ok, what does it MEAN?

No-one should be staying in short-term accommodation right now. Period. Jail sentences and substantial fines can be applied by the state government. This isn’t a strata thing. It’s a state government mandate. Police can be informed of short-term letting and should enforce the ban.

BUT

An Owners Corporation can proceed with making a by-law in accordance with section 137A, to prohibit short term letting for non-residents. It wouldn’t be without some risk. Ideally, you would want to have a by-law that works in harmony with the not-yet-commenced Fair Trading legislation. Admittedly, not much is happening ideally right now.

What should you do?

Given the totality ban on short term letting in place right now, and being mindful of priorities for individuals, it is probably advisable to wait it out until the Fair Trading legislation, including its code-of-conduct commences.

At worse though, if an Owners Corporation were to proceed with making a new by-law under section 137A, some amendments may be recommended with the new legislation commences.

The Owners Corporation Network offers a by-law for its members on short-term letting which you may want to consider.

Still got questions?

Get in touch. We’re here and happy to help.