The New South Wales Government is tightening its cap on non-hosted short-term rental accommodation (STRA), following a planning proposal from  Byron Shire Council that encourages properties to return to the long-term rental market. 

In response to the Independent Planning Commission’s (IPC) recommendation, the cap will be tightened on some STRA from 180 days to 60 days per 365-day period.

Some precincts in Byron Bay and Brunswick Heads with high tourism appeal, near beaches and services, were identified by Council to operate without a cap – allowing for year-round use.

Hosted short term rentals (where the host resides on the premises during the stay) are unaffected by this decision and can be undertaken 365 days per year.

There will be a twelve month transition period for the community and industry to prepare before the new rules take effect on 26 September 2024, ahead of the 2024–2025 summer.

Byron Shire’s housing pressures are different to other New South Wales locations, with the percentage of short-term rentals exceeding that of similar destinations.

The increase in short-term rentals in the region has coincided with population growth alongside limited new housing completions, resulting in very tight supply and high prices in the residential housing market.

The tightened cap is expected to support permanent housing in residential and rural areas, helping key workers and long-term residents who are being increasingly priced out of the market.

The return of non-hosted short-term rental properties to permanent residency is only one part of helping to address housing supply and affordability issues in the Byron Shire, as noted by the IPC. 

Before endorsing the shire’s planning proposal, the New South Wales Government stated that it asked Council to detail how it intended to improve housing supply, in addition to introducing the rental cap.

The Department of Planning and Environment will now work with Council to monitor its commitment to increase housing supply over the coming year, to achieve its broader housing supply commitments to deliver over 4500 houses by 2041.

New South Wales Minister for Planning and Public Spaces, Paul Scully, said “It’s well known there has been an undersupply of housing, particularly affordable and diverse housing across the Byron Shire for many years. This shortage of housing largely affects 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 plan to deliver more housing through other mechanisms, before making a decision on the proposal.

“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. 

“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.

“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 to long-term rentals.

“I thank council, the community, the IPC, industry, and stakeholders for such a collaborative effort to find the best outcome that strikes the right balance for locals and visitors.”

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