Crackdown looming for Byron Bay’s short-stay rental market

The crackdown on short-stay rentals which is aimed at tackling the housing crisis is ramping up nationally with NSW making the latest move, announcing plans to impose tighter restrictions on properties in Byron Bay from September next year.

In response to the Independent Planning Commission’s recommendation in April, the NSW Government plans to tighten the annual cap on short-stay rentals from 180 days to 60 days, making Byron Bay one of the toughest markets for short-stay rentals in the country.

The changes proposed are even tighter than those originally proposed by the Byron Shire Council which had been seeking a reduction to 90 days.

The proposal is in line with a report by the Independent Planning Commission (IPC) which suggested the council’s proposed 90-day cap would not be enough to sway property owners to place their properties into the long-term rental pool.

The latest proposal only affects non-hosted short-stay rentals and doesn’t impact hosted rentals, where the host resides on the premises during the short stay. These properties are allowed to operate throughout the year.

Meanwhile, limited areas where short-stay accommodation is in high demand – such as key central tourism zones at Byron Bay and Brunswick Heads – have also been spared from the proposed changes.

Non-hosted short-stay rental accommodation is currently restricted to a maximum of 180-days in any 365-day period in Greater Sydney and self-nominated local government areas such as Ballina, Byron, parts of Clarence Valley and parts of Muswellbrook.

The NSW Government says Byron Shire’s housing pressures are different to other NSW locations as the percentage of short-term rentals exceeds that of similar destinations.

NSW Minister for Planning and Public Spaces Paul Scully says the move to tighten controls on the sector in Byron is in response to an undersupply of housing, ‘particularly affordable and diverse housing’ across the shire which he says is impacting key workers and permanent residents.

"These changes to short-term rental accommodation only addresses part of Byron’s housing supply and affordability issues, and it was important for me to clearly understand Council’s plans to deliver more housing through other mechanisms, before making a decision on the proposal,” Scully says.

"After reviewing Council's housing response, I am satisfied with the response and have decided to endorse the new cap across parts of the Byron Shire, as recommended by the IPC.”

The NSW Government says the rise in short-term rentals across the Byron region has been exacerbated by high population growth and low volumes of housing completions which has priced locals out of the property market.

"I recognise short-term rental accommodation is a complex matter in the Byron Shire and the housing market and affordability pressures here are particularly acute,” Scully says.

"Given the region’s unique and exceptional circumstances as one of Australia's most visited tourism destinations, it is crucial housing supply shortages are addressed and more homes are returned for permanent residency, particularly to have workers in the visitor economy.

"In the current housing crisis, it's important every available means to boost housing stock for the community is utilised, including a shift from non-hosted STRA (short-stay rental accommodation) to long-term rentals.”

There will be a 12-month transition period for the community and industry to prepare before the new rules take effect on 26 September 2024, ahead of the 2024-25 summer season.

The NSW Government's move follows the Victorian Government’s proposal announced last week to impose a 7.5 per cent tax on short-stay rentals across the state.

The tax, the first of its kind to be introduced in Australia, is being introduced with a view to freeing up some 36,000 homes that are listed on platforms such as Airbnb and Stayz for permanent rentals.