Sydney Councils Powerless to Enforce Short-Stay Caps Amid Housing Crisis

Sydney's local councils are facing growing pressure as they possess limited power to regulate the short-stay accommodation sector, a situation exacerbating the city's rising homelessness and critically low rental vacancy rates. Homelessness NSW has proposed a 7.5% levy on providers using platforms like Airbnb and Stayz, suggesting the generated funds could significantly boost housing support services and increase available rental stock.

In Sydney, where the vacancy rate stands at a mere 2.1%, market analysis indicates over 10,531 active Airbnb listings as of August. Deputy Lord Mayor Jess Miller of the City of Sydney supports stricter regulations but notes that insufficient data hinders councils' ability to distinguish between genuine home rentals and investment properties used exclusively for short-term stays. She expressed concern that investors could exploit new residential developments, effectively re-zoning them for commercial use by operating them solely as accommodation properties.

While the state government introduced a 180-day cap in 2021 for short-term rentals where hosts do not occupy the entire home, and mandated property registration, enforcement remains a challenge. Cr Miller stated that because the Short-Term Rental Accommodation (STRA) database is only accessible to the state government, local councils have limited enforcement capabilities. She urged the government to provide a transparent database detailing property ownership, usage, rental nights, and revenue generated.

A spokesperson for the Department of Planning, Housing and Infrastructure affirmed that councils are responsible for enforcing planning laws related to individual properties, including short-term rentals. The department does provide quarterly data from the NSW STRA register to Airbnb upon request to track changes in short-term rental activity across council areas. However, no other booking platforms have made similar requests. The City of Sydney is currently considering a ban on short-term rental accommodation in areas with high concentrations or vacancy rates below three percent.

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The mythology of the solution to the problem is more supply is completely eroded when you look at what the supply that we have is actually being used for.