30 June 2018

The advent of "home sharing" websites such as HomeAway, Airbnb, and other sharing platforms has stirred debate among communities, property owners and politicians.

So much so that the NSW government this month announced a mandatory code of conduct for short-term holiday letting.

However, while the proposed regulations are a step in the right direction, they fall well short of global standards and more needs to be done.

The NSW guidelines have been three years in the making and provide a level of clarity, as previous council guidance was unclear and inconsistent. Now, short-term letting will be unrestricted if the host is present.

However, if the host is not present, properties can only be let out up to 180 days per year in Greater Sydney. While there are no limits in the rest of the state, councils outside Greater Sydney will have the power to restrict the term to no lower than 180 days.

Owners corporations will also be able to adopt a by-law, with a 75 per cent majority, to prevent short-term letting in their block.

The NSW government will meanwhile implement a mandatory code of conduct to address impacts like noise levels, disruptive guests and effects on shared neighbourhood amenities, as well as a new dispute resolution process.

While these initiatives are a good start, issues remain - particularly when it comes to commercial operators turning residential properties into pseudo hotel rooms.

Well-defined and robust regulations are the key to minimising the impact of short-term letting and a stricter model is required to better regulate the industry.

San Francisco has one of the strictest policies. A host must be a permanent resident (living in San Francisco for at least 275 days a year) and can only rent out their primary residence.

In other global cities, letting is only allowed for up to 90 days per year when the host is not present.

The other issue to consider is whether home-sharing platforms and hosts are paying their fair share of taxes.

Taxing companies like Airbnb can be challenging, however European countries are in discussions to work out how to make home-sharing platforms pay their fair share of taxes and in the right tax domains.

There is also the challenge of getting hosts to declare income derived from letting out their property/room. One possible solution is found in Oakland, California, where Airbnb hosts are required to pay a 14 per cent transient occupancy tax, and in Portland, Oregon, hosts are required to pay a transient lodging tax of 6 per cent of the listing price and cleaning fees.