9 November 2015 The Chair Committee on Environment & Planning Legislative Assembly Parliament House Macquarie Street SYDNEY NSW 2000 Dear Sir

Inquiry into the adequacy of the regulation of short-term holiday letting in NSW

The Owners Corporation Network of Australia Limited (OCN) is the peak body representing residential strata and community title owners and occupiers. Strata is the fastest growing form of residential property ownership in Australia. Over half the new dwellings to be built in our metropolitan areas over the next decades will be strata titled. Short term letting is of course most prevalent in these desirable locations, so the growth of short term letting raises increasingly important questions over property ownership and governance.1 OCN is uniquely positioned through its members to understand the impact of short term letting in long term residential strata buildings. Based on their experiences, as well as overseas experiences, OCN opposes short term lettings, that is, tenancies of less than 3 months in class 2 buildings. The attached submission details the reasons for OCN’s stance on this issue. OCN welcomes this Inquiry and is happy to engage with Committee on any aspect of this submission, and to develop solutions to the issues identified. To close, I will share the question posed by one Sydney CBD executive committee member expending an enormous amount of time, effort and owners’ money to stop this illegal practice in their building: Is the government going to retrospectively remove my rights? If so, will the government compensate me/owners who have purchased a home in a building deemed long term residential in good faith? Sincerely

Karen Stiles Executive Officer 1 City Futures Research Centre ‘Strata Data’ Issue 4, October 2011

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OCN Submission Inquiry into the adequacy of the regulation

of short-term holiday letting in NSW Before making specific comments, OCN wishes to point out that the terms of reference should be extended to include:

1. all forms of short term letting. This includes not just holiday lettings, but any short term letting that targets corporate visitors, students and others requiring accommodation for less than three months, and

2. all forms of multiple occupancy letting, whether or not they are for less than three months. This is critical as all these letting arrangements have a detrimental impact on permanent residents and their strata communities. Fostering a sense of community is fundamental to creating a cooperative living environment that encourages respect for neighbours and the common property. This in turn maintains property values and minimises the cost of repairs and maintenance (levies). In this regard, short term letting is contrary to everything the government aims to achieve in the reform of the strata laws – the Strata Schemes Management Act 2015. 1. The current situation in NSW and comparison with other jurisdictions The State of New York prohibits rentals for stays of less than 30 days in Class A buildings. An investigation by the New York State Attorney General (here and Separate Attachment) found that 72% of units used as private short term rentals on Airbnb appeared to violate the law. The report also found that Commercial Operators (“hosts”) accounted for a disproportionate share of private short term rentals by volume and revenue – 6% of hosts earned 37% of the annual income (Figure 5). A single Commercial User—the top New York host on Airbnb during the Review Period—controlled 272 unique units and received revenue of $6.8 million. This individual received 2% of all New York host revenue for private stays (Figure 6). 2. The differences between traditional accommodation providers and online platforms Licensed short term accommodation providers, such as hotels, Bed & Breakfasts and Farm Stays are highly regulated to protect visitors, particularly in the event of an emergency. Fire safety requirements are more rigorous for short term accommodation because visitors are not familiar with the building, increasing the difficulty of escape and risk of injury or death. 3. The growth of short-term and online letting, and the changing character of the market Private Short-Term Rentals in NY experienced explosive growth from 2010 to 2014. Private short-term bookings in New York City on Airbnb registered more than a tenfold increase. The associated revenue also spiked, nearly doubling each year. Private Short-Term Rentals Displaced Long-Term Housing in Thousands of NY Apartments. In 2013, more than 4,600 units were booked as short-term rentals through Airbnb for 3 months of the year or more. Of these, nearly 2,000 units were booked for a cumulative total of 6 months or more—rendering them largely unavailable for use by long-term residents. Notably, the share of

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revenue from units booked as private short term rentals for more than half the year increased steadily, accounting for 38 percent of each figure by 2013. Numerous Short-Term Rental Units Appeared to Serve as Illegal Hostels. NY law does not permit commercial enterprises to operate hostels, where multiple, unrelated guests share tight quarters. In 2013, approximately 200 units in New York City were booked as private short term rentals for more than 365 nights during the year, indicating that multiple transients shared the same listing on the same night, as they would in an illegal hostel. The 10 most-rented units were each booked for an average of about 1,900 nights in 2013, with the top listing accepting 13 reservations on an average night. 4. The economic impacts of short-term letting on local and the state economies Unrealised Tax Revenue Operators and hosts of short term letting are unlikely to pay hotel bed tax, income tax, or GST. Lost Investment in Infrastructure Another impact on the economy is the reduced attractiveness of cities with large scale private short-term letting to overseas investors, that is, large hotel operators. Welcoming plans by the Pontiac Group to restore ‘The Sandstones’ in Bridge St, Sydney, Carol Giuseppi, chief executive of Tourism Accommodation Australia (TAA) warned “The new investment in our city is threatened by the spiralling increase in unregulated short-term accommodation – some within a few hundred metres of the sandstone buildings – which are operating contrary to strata, council and other rules. Investors in Sydney need to be confident that their hotel properties will be able to operate on a level playing field. Article (also Annexure 1). Lost opportunity for jobs creation Illegal short-term letting creates very few new jobs, unlike the established accommodation providers this practice is likely to discourage. 5. Regulatory issues posed by short-term letting including customer health & safety, land use planning and neighbourhood amenity, and licensing Health & Safety Class 2 buildings are built to Building Code of Australia (BCA) requirements not designed for short term occupancy (Class 3). For example class 2 buildings are exempt from having illuminated green EXIT signs to indicate the location of a fire escape (BCA E4.7) (Annexure 2). Residential apartment buildings are exempt from NSW Work Health and Safety Act 2011, whereas Class 3 buildings would be required to adhere to WH&S regulations. Short term occupants in a Class 2 building would be unfamiliar with the layout of the building and be at greater risk of injury or death in an emergency. Short term letting providers also promote overcrowding. See attachment for Air BNB listing for 6 occupants in a 2 bed room apartment (Annexure 3). Class 2 building emergency escape routes are designed for a specified number of occupants. A significant number of apartments with occupants beyond the design criteria puts at risk the safety of occupants in the event of excessive demand of emergency egress.

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There would also be no central register (strata roll) of residents to assist in identifying the missing or dead in the case of an emergency such as the Bondi Junction gas explosion. 6. The impact on long term residents of short-term letting in their building Allowing checkerboard short term tenancies results in the overall degrading of amenities and capital values, resulting in increases in levies. It is short term profiteering with a long-term cost. Experience of OCN members who have had short term occupants in their class 2 buildings have highlighted many issues including:

Excessive wear and tear on common property with increased usage

Increased repair and maintenance costs – Maestri Towers (see item 8. below) is saving $1.3m per annum in administration costs since short-term letting ceased. This levy burden is borne by all owners, and is grossly unfair to owners acting legally and responsibly.

Breach of building security – ever changing strangers often have little regard for building security and etiquette. Compliance with fire standards and ordinary safety procedures, such as locking doors, are ignored

compliance with fire standards and ordinary safety procedures, such as locking doors, are ignored

Excessive noise, including late night parties and loud music

Drunken behavior

Garbage disposal issues

Excessive water use

Overcrowding

Violations of by laws, including visitor parking restrictions

Peak hour demands on lifts at checkout time

Strata insurance is designed for class 2 buildings with long term residents. Short term letting increases the risk profile of class 2 buildings which could prejudice the Owners Corporation in the event of a major claim.

Strata contents and landlords insurance is designed to cover long term residents. See Insurance Council of Australia November 2014 media release (Annexure 4). What will happen in the event of injury or death of a short-term occupant? Will the owners corporation – including responsible owners - be sued for damages? Lot owners have unlimited liability.

The level of threat/intimidation/bullying/harassment of owners attempting to prohibit illegal activities can be extreme/obscene

The physical and financial cost to owners and, in particular, voluntary executive committee members of protecting the common property of their building from the ravages of illegal short-term letting is enormous and unconscionable. The cost of obtaining legal advice, NCAT, Council and Supreme Court applications etc in human and financial terms are incalculable. 7. The impact on Affordable Housing Short term letting puts greater pressure on availability of long term residential stock, which in many areas of metropolitan Sydney is in great shortage. Bridgeport in Bridge St, Sydney, short term letting peaked at 58 of 163 residential lots. Maestri Towers in Kent St, Sydney peaked at 205 out of 384 residential lots being short term let.

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Reference is made to comments made by the then Planning Minister, Brad Hazzard, in Hansard, 21 November 2013 regarding the critical shortage of residential accommodation (Annexure 5). See also Leichhardt property long term and short term letting fees (Annexure 6). 8. Other related matters. In Dobrohotoff v Bennic (2013) NSWLEC 61 (the “Dobrohotoff Case”): The relevant local environmental planning instrument, the Gosford Planning Scheme Ordinance, did not contain a definition of short term holiday rental accommodation. As such, it was unclear as to whether the use of Ms Bennic’s property in this manner was prohibited (and, therefore, in breach of the Environmental Planning Act 1979 (NSW)). Justice Pepper held that the use of Ms Bennic’s property meant that the property could not be classified as a ‘dwelling house’ …because it could not be fairly said, looking at its use as a whole…that, as a matter of fact, the property was being occupied in the same way that a family or other household were in the ordinary way of life would occupy it. A tenancy granted to persons who are residing in a group situation for periods of a week or less for the purpose of bucks nights and hens nights, parties or for the use of escorts or strippers, is, in my opinion not consistent with the use or occupation by family or household group in the ordinary way of life, and therefore not consistent with the use of the property as that of a dwelling house. …. Furthermore, when considering the first limb of the definition of dwelling, regard must be had to the notion of domicile contained within it, and the critical element of permanence. Inherent within the term domicile is, as a long line of authority in this jurisdiction has established, the notion of a permanence home or at the very least a significant degree of permanence of habitation.[1] This determination had the effect of rendering the use of Ms Bennic’s property prohibited within the relevant residential zone (as it was not identified as being otherwise permissible) and Ms Bennic was found to have breached Section 76B of the Environmental Planning Act 1979 (NSW). 1

In Council of the City of Sydney v Oaks Hotels and Resorts (NSW) No.2 Pty Limited (No 2 re Maestri) [2011] NSWLEC 235 (7 December 2011) Oaks Hotels and Resorts were ordered to stop operating short term serviced apartments in contravention of the development consent:

Orders

1. Accordingly, the court orders: 1. The respondent (by itself or its agent) is restrained from 1 January 2012 from using the premises

situated at and known as 'Oaks Maestri Towers', 298-304 Sussex Street, Sydney NSW ('the Premises') for the purposes of 'serviced apartments' ('the said Purpose') unless and until development consent for such use is granted pursuant to the EPA Act and such consent is in force.

2. The respondent (by itself or its agent) is restrained forthwith from: (a) advertising or holding out the Premises or any part of them as available for the said Purpose; and (b) easing or licensing the Premises or any part of them for the said Purpose unless and until

development consent for such use is granted pursuant to the EPA Act and such consent is in force. 3. The respondent pay the applicant's costs of these proceedings as agreed or assessed. 4. The applicant has liberty to apply on three days notice.

1 http://www.millsoakley.com.au/happy-holidays-stratum-and-short-term-holiday-accommodation-in-byron-

shire-council-and-beyond/

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9. Regulatory Response Required In the context of strata schemes regulation should take the following form with a requirement: 1. That development consents for strata schemes state expressly whether or not Short Term

Letting is permitted 2. That the definition of Short Term Letting be clarified so that it encompasses

a) all lettings for periods of less than 3 months, together with b) all lettings which do not have a dominant residential purpose

3. That the Strata Schemes Management Act 2015 be amended to permit the making of by-laws

specifically to control the manner in which lots in a residential strata scheme are let or sublet.

4. That the Strata Schemes Management Act 2015 be amended to permit an owners corporation right of access to lots for the purpose of ascertaining that their use is compliant with any relevant planning instrument or the scheme’s by-laws, in a manner similar to the way access can be obtained to maintain common property.

5. That s.258 of the Strata Schemes Management Act 2015 extend the obligation to provide details of lessees and sublessees to owners’ agents and that the address for service provided for the tenant be a permanent residential address, not that of the owner’s agent. The accuracy of such information is essential to the effective control of Short Term Letting. And to identifying people in the building in the case of an emergency.

6. That the Strata Schemes Management Act 2015 be amended to state that the use of a lot for purposes other than as permitted by the relevant planning instruments is an offence rendering both the owner and any tenant liable at law, together with any agent acting with knowledge.

In the context of short term rentals where they are legally allowed to operate, in order to qualify as a legitimate short-term rental, the property must abide by a strict set of requirements. It must: • contain a bathroom and kitchen within the unit • not be currently be a rent stabilized or rent controlled unit • not receive any type of subsidy for affordable housing • have an evacuation diagram posted for guests in case of an emergency • have smoke detectors located in each room • be covered by sufficient liability insurance, and • The operator must pay all appropriate state sales and occupancy taxes • The operator must register with Council Further, there needs to be very clear planning requirements that limit the number of properties which may be utilised as short-term rentals. Under a registration process, the individual would register with their local Council for a fee and attest to a standard of operation that: • guest registration records will be kept • no illegal activity or public nuisance will be permitted • specific building code occupancy limits will be followed • cleaning procedures will be followed between guests, and • the name of a local contact person shall be provided to all guests.

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Two complaints that lead to findings two separate violations will lead to complete revocation of the operator’s registration. Violations include (1) failure to abide by any of the above provisions, including those attested to in the registration, (2) operating without properly registering with Council, and (3) making any false, misleading or fraudulent statement on the registration.

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Annexure 1 Hotel Accommodation Operators Need Certainty to Invest

Sandstone hotel plans welcomed SMH September 18, 2015

Carolyn Cummins, Commercial Property Editor

The "Sandstones" in Sydney will be converted into a hotel.

Singapore's Pontiac Land Group's victory to develop the two heritage sandstone buildings in Sydney's Bridge

Street into a $300 million, 240-room luxury hotel has been welcomed by the hotel sector, with operators and

developers keen to see the market expand.

Carol Giuseppi, chief executive of Tourism Accommodation Australia (TAA), said the plan to redevelop the

buildings was good news for Sydney tourism and is part of a wave of new hotels and serviced apartments that

are scheduled to be added in the city over the next five years.

Under the plan, Pontiac will pay Government Property NSW $35 million for the lease of the former Lands

Building at 23-33 Bridge Street and Education Building at 35-39 Bridge Street, between Martin Place and

Circular Quay, together with a commitment to an estimated $250-$300 million refurbishment of the assets.

"The new hotels will play a crucial role in supporting the launch next year of the new International Convention

Centre and will help elevate Sydney into one of the world's greatest business and tourism destinations," Ms

Giuseppi said.

But she warned the NSW government needs to crack down on the flood of unregulated short-term

accommodation that is unfairly competing with Sydney's hotels.

"The new investment in our city is threatened by the spiralling increase in unregulated short-term

accommodation – some within a few hundred metres of the sandstone buildings – which are operating contrary

to strata, council and other rules," Ms Giuseppi said.

"Investors in Sydney need to be confident that their hotel properties will be able to operate on a level playing

field. It is estimated that there are over 10,000 rooms and apartments being made available for short-term rental

across Sydney, many of which are operated as commercial businesses without the requisite permits. This is not

good for future investors."

Aside from the short-term rental issues, the Pontiac deal comes as the hotel industry is riding high, with more

than $4.2 billion in hotels transacting in the 12 months to June 2105, up 107 per cent on the previous 12 months.

According to Savills, the Australian hotel market continues to be dominated by overseas investors, who bought

54 per cent of hotel assets sold in the 12 months to June 2015, for $2.7 billion. Savills Hotels valuations

and consultancy director, Adrian Archer, said that this could be higher, with another 25 per cent comprising

private investors whose geographic origin is undisclosed.

Savills Hotels managing director Michael Simpson said the numbers were not surprising. "Australia remains to

be a safe investment destination due to its strong banking system, consistent and transparent investment market,

relative legislative certainty, low cost of debt and strong real estate investment yields," Mr Simpson said.

The low Australian dollar, rapid growth of inbound tourism and increased business confidence has led to an

increase in the average hotel room rates across Australia by 3.7 per cent, with both Sydney and Melbourne being

the standout performers.

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Annexure 2 BCA Requirements

E4.6 SERVICES AND EQUIPMENT

Deemed-to-Satisfy Provisions

E4.6 Direction signs

NSW E4.6

If an exit is not readily apparent to persons occupying or visiting the building then exit signs must be installed in appropriate positions in corridors, hallways, lobbies, and the like, indicating the direction to a required exit.

E4.7 Class 2 and 3 buildings and Class 4 parts: Exemptions

E4.5 does not apply to—

(a) a Class 2 building in which every door referred to is clearly and legibly labelled on the side remote from the exit or balcony—

(i) with the word “EXIT” in capital letters 25 mm high in a colour contrasting with that of the background; or

(ii) by some other suitable method; and

(b) an entrance door of a sole-occupancy unit in a Class 2 or 3 building or Class 4 part of a building.

E4.8 Design and operation of exit signs

Every required exit sign must comply with—

(a) AS 2293.1; or

(b) for a photoluminescent exit sign, Specification E4.8; and

be clearly visible at all times when the building is occupied by any person having the right of legal entry to the building.

E4.9 Sound systems and intercom systems for emergency purposes

A sound system and intercom system for emergency purposes complying where applicable with

AS 1670.4 must be installed—

(a) in a building with an effective height of more than 25 m; and

(b) in a Class 3 building having a rise in storeys of more than 2 and used as—

(i) the residential part of a school; or

(ii) accommodation for the aged, children or people with a disability; and

(c) in a Class 3 building used as a residential aged care building, except that the system—

(i) must be arranged to provide a warning for occupants; and

(ii) in areas used by the residents, may have its alarm adjusted in volume and content to minimise trauma consistent with the type and condition of residents; and

(d) in a Class 9a building having a floor area of more than 1000 m2 or a rise in storeys of more than 2, and the system—

(i) must be arranged to provide a warning for occupants; and

(ii) in a ward area, may have its alarm adjusted in volume and content to minimize trauma consistent with the type and condition of patients; and NCC 2015 Building Code of Australia - Volume One Page 270

E4.9

SERVICES AND EQUIPMENT

Deemed-to-Satisfy Provisions

(e) in a Class 9b building—

(i) used as a school and having a rise in storeys of more than 3; or

(ii) used as a theatre, public hall, or the like, having a floor area more than 1000 m2 or a rise in storeys of more than 2.

NCC 2015 Building Code of Australia - Volume One Page 271

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Annexure 3 Airbnb listing of 2 bedroom apartment for 6 people

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Annexure 4 Insurance Council of Australia Warning

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Annexure 5 Hansard 21 November 2013 on Housing Shortfall

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Annexure 6 Leichhardt Property – Rental Value Short & Long Term Letting

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Annexure 7 Bridgeport Case Study

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Annexure 8 Portico Case Study

(Supporting documents in separate document)

Adequacy of the Regulation of Short Term Letting in NSW Inquiry

In 2012 I sold my house in the Upper North Shore and downsized to a one bedroom

apartment in the Portico Building at 2 York St., Sydney. The apartment although small was

just perfect for our home in retirement. The central location allowed us to sell our cars and

walk or take public transport. We joined the Go-Get car share scheme under Wynyard Park

and use a car about once a month.

The Portico Building situated on York Street between Margaret and Jamison Streets

comprises a stratum which includes the Scots Church and 148 residential and five commercial

lots on street level.

The Travelodge and York Hotels are opposite us on the western side of York Street and the

Amora Hotel shares the laneway on the eastern side. The Menzies Hotel is diagonally

opposite on the southern side of the Portico Building.

The residential building known as Portico is surrounded by hotels and a short walk to the

financial district, circular quay and the historic Rocks area.

When I bought the apartment in Portico I checked the title (attachment B6) and noted that

there was a restriction by way of an 88B Instrument pursuant to the Conveyancing Act of

1919. I checked the 88B instrument (attachment B7-9) which said the common property and

the lots 1-148 ‘shall only be used and occupied for the sole purpose of permanent residential

accommodation’ as defined in the Central Sydney Local Environmental Plan 1996.

The title assured me that I would indeed be living in a ‘residential building’ which is what I

wanted. I had looked at apartments for sale in The York across the street which were lovely

but decided I did not want to live in a building where some apartments were managed as part

of the hotel scheme. I wanted the opportunity to live in a vertical community where my

neighbors were known to me, where we each considered our behavior towards each other in

the knowledge we had much in common.

The vendor wanted a long settlement and so we stayed in Portico in another apartment I

owned for several months. This apartment is leased for a minimum of 6 months through a real

estate agent. I receive about $700 a week for this one bedroom apartment without a car space

but could receive more than double that amount if the property were leased through Airbnb or

similar sites.

Over the Christmas/New Year’s Eve period the residents of the apartment above us partied

hard making a lot of noise and, although the police were called, the noise started up again

shortly after the police left. We later learned the owner was short term letting the apartment

for a week at a time. This was a totally miserable experience as we were unable to sleep for

the thumping on the wooden floors above and the loud noise. The building manager contacted

the owner who said she would do as she liked with her own property. The Executive

Committee issued Notices pursuant to the Strata Schemes Management Act but this made no

difference to the owner’s decision to short- term the apartment.

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In January 2013 we moved to our new one bedroom home and left behind living beneath an

apartment rented by the week. Since moving within the Portico building we have had

considerate neighbors who do not short term let their apartments.

As time went by I noticed that more and more groups of people were standing at the

concierge desk and getting keys. On one occasion I struck up a conversation with a group of

five Irish girls who were backpacking and had leased a one bedroom apartment for a week’s

stay in Sydney. The issue now was not only short term letting but overcrowding as well.

I started to check the AIRBNB site and have copied material for just two listing from the

AIRBNB site (D1-D24 and E1-E5). One advertisement is by an owner and the second by a

tenant.

A 2 bedroom apartment for $450/night for 5 people on the 11th floor (D12)

o The services available include the 24 hours a day concierge service (D14)

o In January 2014 there were 13 reviews (D 24)

o The host known as Shane provides some personal information including his

photograph (D24)

A one bedroom apartment (E1-E5)

o In January 2014 8 reviews (E3-E5)

Apartments in Portico rent weekly for the equivalent of two nights of an AIRBNB letting,

giving owners a great financial incentive to short term let to tourists wanting to experience

Sydney (F1-F9).

The financial incentive for the owner or tenant is very clear. But whilst all the commercial

income from the venture goes to the AIRBNB host (or equivalent on other websites) the risks,

and expenses and inconvenience are shared with the other owners.

The issue of short term letting was considered by the Portico Executive Committee and legal

advice taken. On the basis of that advice a policy was produced and circulated about July

2014 (A1-A4).

The policy has had limited effect and caused the owner of one of the Airbnb listed apartments

to stand for election (and be elected) onto the Executive Committee.

The policy did lead to the cessation of listings for short term letting for some owners and

tenants.

I wrote to the CEO of the City of Sydney Council on 5 December 2014 and have not received

a reply.

I did however receive a telephone call from a City of Sydney building inspector and I have

attached the correspondence (C1-C7) which ended up in the Council taking no action.

I also attended the City of Sydney Council and spoke to the duty planner who told me the

case in Melbourne had changed everything and that people could short term let if they liked.

The duty planner made it clear my situation was hopeless.

I subsequently met senior officers of the Department of Planning. I attach my briefing note

(G1-G3) but I am unable to talk about the meeting having signed a secrecy agreement,

which is standard practice.

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Currently only the City of Sydney Council can take legal action and if they choose not to

enforce the DA consent conditions or the 88B Instrument, then an owner can do nothing.

Below some of the facts and from these drawn out some of the issues.

Facts

Mixed retail and residential scheme of 148 apartments

The accommodation portion of the building is subject to restrictions on lawful use

through the Development Consent read in the context of the Planning Controls of the

Central Sydney LEP 1996 and the Central Sydney DCP 1996 and Clause 2 of the S

88B Instrument registered with the Strata Plan.

The Development Consent restricts the accommodation portion of the building as

permanent residential and not for the purpose of a hotel, motel, serviced apartment,

private hotel, boarding house, tourist accommodation or the like. (B3-B4)

A certificate signed by the Owners Corporation must be forwarded every 12 months

certifying all units are either owner occupied or subject to residential leases under the

Residential Tenancy Act 1987. But in reality this does not happen and the Council

does not follow up.

Strata Plan is Zone B8 Metropolitan Centre

A small number of owners and tenant list through Airbnb and similar sites but those

who do will do it often.

Legal Advice was obtained from a specialist strata lawyer on whether short term

letting is permitted in our building.

A policy based on that legal advice was approved by the Executive Committee and

distributed to residents, property managers and owners.

Some people withdrew their Airbnb listings but others did not.

Issues

1. Short term letting in residential buildings where it is not permitted exposes other law

abiding owners to risk of loss of quiet enjoyment of their property, and exposes them

unwillingly to the losses not covered by a building insurance policy.

2. Short term letting adds to the costs of running the building (concierge staff have to

manage keys, the cleaners who come in to service the apartment after the letting has

finished use the lifts and dump garbage, concierge and building management time

taken to deal with drunk short term letting individuals), but no contribution is made by

those owners or tenants who reap the benefits.

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3. Residents who suffer poor conduct from short term letting individuals (eg noise, drunk

in the lifts, rubbish chutes blocked, cigarette smoke) have no immediate remedies

because the Breach of By-Law process is slow and expensive and the offending

person has gone before the matter comes before the Tribunal (this adds to the costs of

running the building as well).

4. Short term letting bypasses all the usual security measures adopted by the owners

which involve a lease to be held by the building manager.

5. The law is unclear (as there is no legal authority) on how a court will determine the

meaning and effect of permanent residential accommodation pursuant to section 88B

of the Conveyancing Act and may find short term accommodation is permissible if

subject to an agreement under the Residential Tenancies Act. It has been argued that a

one week lease would satisfy the requirement of permanent residential

accommodation.

6. The table below identifies inconsistencies between leases taken for less than three

months and more than three months:

Restrictions Residential Tenancies Act

2010

Residential

Tenancies Act 2010

Under 3 months 3 months plus

Planning Controls Not permitted Permitted

S 88 Instrument Not permitted Not permitted

What can be done Complain to Council but

enforcement unlikely

Complain to Council but

enforcement unlikely

7. Neither the Owners Corporation nor individual owners can take legal action in respect

of short term letting because the City of Sydney is the only entity which has legal

standing before a court. But the Council will rarely act.

8. The building’s fire measures have been designed for permanent residential

accommodation and do not meet the standards for short term letting which exposes all

owners to liability if the insurer will not pay because the property is being used for a

non-permitted use. All owners would be jointly and severally liable. Retrofitting fire

measures to meet standards for short term letting would cost millions of dollars.

9. It is uncertain whether a claim would be paid under the buildings insurance policy as

the property is being used for non-permitted use.

10. The individuals who short term let in the building collect extra income but the

additional costs are paid by those who do not short term let. In short all owners

through the payment of levies subsidize the income made by those who short term let.

This seems unfair.

11. I own a rental apartment in the Portico building and I lease my property through an

agent. I report all my income in my annual tax return and pay tax on the profit I make.

I wonder if the other owners/ tenants who let their apartments short term do the same?

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Revenue is lost, no jobs are created and inconvenience is created by those who

illegally short term let their apartments which is a cost to the community.

12. Short term letting and over- crowding often go hand in hand.

What do I want from the Inquiry?

A. As an owner and Executive Committee Member I want a simple cheap and alternative

system made available to permit me to enforce (and to recover costs) from owners who

directly short term let their properties. The City of Sydney Council has neither the will

nor the resources to enforce the consent conditions.

B. As an investor I want a level playing field with those who directly let their property in a

peer to peer arrangement so we are both subject to the same rates of taxation.

C. As an owner I don’t want to assume the risks and the extra costs associated with

unrelated other owners/tenants using their property for short term letting for periods as

little as one night.

D. As a citizen I want essential service providers such as nurses, teachers and fire fighters

to have access to accommodation near their work in the inner city and not be priced out

by the reduced supply created by short term letting.

E. As a purchaser I want to know what the permitted use of the strata property is before I

buy.

F. As a parent I want jobs for my children and short term letting creates no jobs in the

tourist industry.

G. As a resident I want the quiet enjoyment of my property and the common property I

bought.

Jennifer Game, October 2015