Why so technical? Technical Services for Hotel Developments

The Mandatory Code in New South Wales + changes in 2021 

A mandatory Code of Conduct for the Short-Term Rental Accommodation Industry in NSW commenced on 18 December 2020 (the Code). The Code did not have any impact on rules around residential tenancies and other traditional forms of short-term accommodation like hotels, targeting solely commercial arrangements where an occupier is given the right to occupy a residential premises for up to three months’ at a time. 

The Code was implemented to regulate the industry and to establish mandatory minimum standards of behaviour and requirements for booking platforms, hosts, guests and letting agents. The Code also establishes dispute resolution and complaint processes and is generally intended to facilitate the oversight of the short-stay industry in by NSW Fair Trading. 

The Code was updated on 28 May 2021 to provide that a premises register is to be commence in November 2021.  In addition to this register, the NSW government has made amendments to the State Environmental Planning Policy (Affordable Rental Housing) 2009 (NSW) and the Environmental Planning and Assessment Regulation 2000 (NSW) by way of the State Environmental Planning Policy (Affordable Rental Housing) Amendment (Short-term Rental Accommodation) 2021 (NSW) which will come into effect on 1 November 2021 (the Policy), unless it relates to the Byron area, which only requires compliance by 31 January 2022. 

The Policy will differentiate between hosted (where the permanent resident remains within the property during any guest stay) and non-hosted accommodation (where the permanent resident does not remain at the property).  The Policy provides for exempt development if a property is developed for the purposes of short term accommodation that is hosted, subject to compliance with the requirements of section 51E of the Policy.  For properties that are contemplating being developed as non-hosted accommodation, in addition to compliance with section 51E, non-hosted development may not be used as such for more than 180 days in any 365 day period (if the accommodation is in a prescribed area, defined by reference to maps).  

The Victorian landscape 

The holiday rental/short stay accommodation industry in Victoria is less strictly regulated than in NSW. Holiday and short-term accommodation landlords are instead guided by a Code of Conduct which sets out their management and maintenance responsibilities. The only government intervention seen so far is the implementation of a complaints process, which is administered through changes introduced in February 2019 to the Owners Corporations Act 2006 (Vic). 

The changes enable the Victorian Civil and Administrative Tribunal (VCAT) to impose fines, award compensation and prohibit apartments from being rented out for short-stay accommodation. Owners Corporations are also able to issue breach notices to guests. This additional form of regulation certainly imposes some accountability for ‘Airbnb’ hosts which is no doubt welcomed by the hotel industry. 

Recent amendments to the Owners Corporations Act 

On 23 February 2021 The Owners Corporations and Other Acts Amendment Act 2019 (Vic) was assented to and will be operative on 21 December 2021 (if not proclaimed earlier) (Act). 

Initially, the Act proposed to limit certain contracts for hotel, resort and serviced apartment complexes to three years in duration, as it does with other service and management contracts entered into in relation to the Owners Corporations Act 2006 (Vic). After lobbying from the hotel and serviced apartment industry, this proposal to limit the term of hotel management agreements (and the like) was thankfully deleted. 

However, the power remains to pass regulations that may have an impact on some management or service-related contracts for services provided by hotel and resort operators in mixed use schemes.  Until these regulations are tabled for discussion, the market will be no clearer on the potential for short term accommodation regulation in this context.  However, it is possible that regulations may be made prescribing requirements for hotel and resort management contracts that may restrict the term of those contracts, increase, limit or place parameters on fees and charges under those contracts and prohibit or regulate the inclusion of specific terms and conditions in those contracts.