Short-term rentals and home stay wear out their welcome

The housing crisis in NSW continues to spiral out of control, yet the Minns government inexplicably refuses to pull a handy lever it has to address the chronic shortage of rental properties.

A review of short-term rental accommodation remains unreleased three years down the line.

The review was expected to consider tightening caps on short-term rentals – in some sought-after Sydney suburbs and destinations such as Byron Bay where Airbnb and Stayz properties have proliferated, forcing out locals unable to afford to rent – and the introduction of a tax on short-stay accommodation.

The Herald’s Jessica McSweeney and Megan Gorrey report councils across NSW are grappling with ways to manage the proliferation of short-term rental accommodation as they attempt to strike a balance between tourism and a widespread shortage of affordable rentals.

But councils are relatively powerless: City of Sydney councillors have floated unworkable workarounds, including asking booking platforms for “voluntary donations”, imposing largely unenforceable 30-day caps and banning investors from running short-term rentals. It is much ado about nothing – only the state government has the power under NSW planning laws to ban such businesses.

When Airbnb led the charge into the short-term rental market, the moral panic centred around the ruination of the neighbourhood. Now many other property owners have boarded the money train. In Sydney, they helped drive rents sky-high. Inland and along the coast, they turned many destination towns into high-price enclaves where workers servicing the tourist industry have left or can’t get in.

In September, Sydney’s short-term rental market had 15,683 active listings, according to figures from international data provider AirDNA. However, Grattan Institute housing and infrastructure program director Andrew Barker said short-term rental properties made up only about 1 per cent of housing stock nationally and in Greater Sydney, but in the City of Sydney, it was closer to 5 per cent.

The industry’s impact on the rental market is highly disputed.

Airbnb’s submission to City of Sydney’s Housing for All discussion paper argued that the blunt caps and bans would not solve the housing crisis and said short-term rentals represented a “tiny fraction of the housing market” and were not the cause of the shortage.

Nicole Gurran, a professor of urban and regional planning at the University of Sydney, told the Herald regulating non-hosted short-term rentals was “a no-brainer in the current [housing] situation”.

In late 2023, Premier Chris Minns announced the review of the booming short-term rental industry and identified as many as 90,000 homes, including holiday houses, rentals and vacant properties with potential to be lured onto the long-term rental market amid the worsening housing crisis.

Not all 90,000 properties will enter the rental market, but such an under-utilised motherlode surely affects housing supply. Yet three years later, the government is still sitting on its hands. It must release the report.

Tourism is essential to Sydney, but a truly global city without a permanent, thriving community is not a city we want.