A new code of conduct to better regulate short-term rentals

A new code of conduct to better regulate short term rentals header image

Short-term rental accommodation hosts, guests, letting agents and online booking platform operators will soon be subject to a new regulatory framework, with a mandatory Code of Conduct to be introduced on 18 December 2020

Owners corporations and investment property owners across New South Wales have experienced some years of inconsistent governance and industry regulation compared to the traditional accommodation sector.

Industry has watched more than two years of NSW Government Parliamentary inquiry and industry consultation into industry regulation. There have also been a troubling few months following the withdrawal of the Code of Conduct for the Short-Term Rental Accommodation Industry, by the NSW Government in April 2020. Property owners, owners corporations and peak industry bodies have been actively lobbying the state government to address industry regulation and control.

On 31 October 2020, owners corporations and strata property owners welcomed the announcement of a new state-wide planning framework, mandatory Code of Conduct for the Short-Term Rental Accommodation Industry (Code) and changes to strata legislation to be introduced from 18 December 2020.

The declaration will apply to short-term rental hosts guests, letting agents and online booking providers. Of particular interest are the implications of the new Code and the implementation of a premises register.

The premises register is a register of short-term rental accommodation hosts and premises administered by the Department of Planning, Industry and Environment.

Also, the Commissioner for Fair Trade must maintain an exclusions register for those whose breach of the Code is such that they are placed on the exclusions register.

To help property owners quickly understand the new Code of Conduct to better regulate short-term rentals, PICA Group has summarised the obligations under the Code and the penalties for breaching it:

Obligations under the Code:
For guests
For Hosts
For agents and online booking providers
Penalties for breaching the Code
Where to find more information about the Code

Obligations under the Code

The mandatory Code enforces minimum standards of behaviour for all parties. These are outlined as follows:

Guests

Short-term rental guests must not damage the premises or common property, or make noise that unreasonably disrupts neighbours. Guests are also obliged to obey behaviour standards detailed in the Code.

If guests fail to meet the standards in the Code, they may be subject to a “strike”. A strike is a record of a contravention of the code made against a host, guest, or premises with respect to a host and identified as a strike. If the conduct of the guest warrants it, they may be placed on the exclusions register.

Hosts

There are also several new regulations for short-term rental hosts under the Code.

Insurance cover must now include liability for third-party injuries and death. And your neighbours must have the ability to contact you about concerns relating to your property between 8:00 am and 5:00 pm seven days a week.

As far as guest behaviour is concerned, the host must take reasonable steps to ensure their guests understand the behaviour standards of the Code and make a copy of the Code available to them.

All hosts must register themselves and their short-term rental property on a state-wide premises register. Once the premises register is launched in 2021, it is also critical that the host does not rent their premise out to a guest who is listed on the exclusions register.

Agents and online booking providers

As a letting agent or online booking provider, you must tell your hosts and guests using your service about the Code. You must also let them know how to lodge a complaint under the Code, and communicate any complaint made against them for behaviour that may contravene the Code.

And once the premises register is in force, agents and booking providers must record themselves and the properties for which they are responsible on the register. They must not advertise or offer the property for rent if the host or the property are listed on the exclusions register.

Penalties for breaching the Code

If any parties breach the Code, they could face a range of penalties, such as:

a warning or direction to take or cease certain action
application of a fine
a ‘strike’ against a host, host’s premises, or guest for serious breaches
recording a guest, host or host’s premises on an exclusion register

if two strikes are recorded in a two-year period, guests or their visitors will be listed on an exclusion register and prevented from booking a short-term rental or having their property advertised as a short-term rental, in NSW for five years once the register is officially published in 2021.^*

^*Fair Trading NSW will publish the latest advice about the obligations under the premises register and the exclusion register before the commencement of the Code on 18 December 2020.