New short-term letting regulations are set to commence.  What do they mean for investors (hosts) and guests?

If the property owner lives in the property, they may use a room/s in their home for short-term letting 365 days a year without submitting a development application to Council.  They may also allow their entire home to be let short-term while they are away on holidays.  However, if the property is not the host's principal place of residence and the home is located within the Greater Sydney area, the host will be limited to renting out the home for a maximum of 180 days each year, and under strict regulation that is designed to ensure that hosts / investors can continue to gain from the economic benefits of short-term letting, while protecting neighbours from anti-social behaviour such as noise, disturbance and damage to common property.

What will the changes look like?

  1. Owners corporations may adopt a Special By-Law with a 75 per cent majority vote to prevent property owners who do not live in their unit from short-term letting their property.  In other words, with a 75% majority vote, an entire unit block can prevent all owners from short-term letting their units: now and in the future.  The cost of making and changing a Special By-Law means that once set, a Special By-Law is not likely to be changed in the near future.  The presence - or absence  - of such a By-Law may impact property prices in that block (positively or negatively, depending on the mix of owners, long-term tenants and short-term tenants).
  2. Properties where the owner does not live in the property may only be available for short-term letting 180 days of the year (Greater Sydney area).  If the owner lives in the home, there is no limit on short-term letting.
  3. A mandatory code of conduct will be established for both hosts and guests to address impacts on neighbours such as noise, disturbance and effects on common property and shared spaces.  A two-strike policy will be introduced, where if hosts or guests seriously breach the code twice within a two-year period, they will be banned for five years and placed on an exclusion register.  This would mean that online platforms and agents will not be permitted to offer services to any person (or dwelling) that is listed on the exclusion register.  A complaints register will be established and complaints will be assessed by independent adjudicators who will be required to make decisions on evidence and after giving both complainants and respondents a chance to put forward their case.


The majority of properties are owner-occupied, and it's owner-occupiers that drive up property prices.  It's reasonable to believe that owner-occupiers will be attracted to properties that do not allow short-term letting; this may result in lower demand for properties that allow short-term letting and hence devalue those homes; alternatively, if fewer homes allow short-term letting, the investor demand for such properties may increase. 

Investors who wish to let their properties on a short-term basis may need to consider leasing the property long-term on a 6-month lease in quiet times and transferring to short-term letting for the busy period.  However, most tenants these days do not like 6-month leases: the trend is towards long-term leases, so investors may need to discount the rent to get a 6-month lease.

Higher rates for short-term letting: the reforms are likely to impact on supply of short-term accommodation, particularly as some owners corporations act to rule it out in their blocks.  The impact may be diminishing supply of short-term accommodation and hence an increase in rates.  This could be a positive move to restore balance to the long-term rental market.

Melissa Maimann is a Licenced real Estate Agent and Buyer's Agent in Sydney.  She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions.  Melissa's service is fast, efficient and accurate.  If you need a hand with your next purchase, don't hesitate to make contact.