A push to ban property investors from running short-term rentals in the City of Sydney has been kiboshed under state planning laws, as councillors float alternative proposals such as a 30-day cap or voluntary affordable housing contributions from booking platforms to free up more homes.
Councillors are heaping pressure on the Minns government to release the long-awaited findings of a review into short-term rental accommodation announced in 2023, or give councils more enforcement powers, after the City of Sydney’s chief planner determined only the state government had the power under NSW planning laws to move forward with a ban.
The City of Sydney is among councils across NSW 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 rental housing.
Greens councillor Matthew Thompson said: “This is a statewide problem that will require a statewide solution. We need the state government to step up and act. But we can’t wait for them.”
The council this year voted to investigate avenues to an outright ban on unhosted stays either for a specific time period, in specific suburbs including Millers Point and Darlinghurst, or connected to rental vacancy rates. However, all of these options were ruled out by the advice from council staff.
Sydney’s short-term rental market had 15,683 active listings as of September, according to figures from international data provider AirDNA.
A reduced cap on the number of days is the only lever available to council under existing laws, the advice determined, which Thompson plans to raise in a motion at Monday’s council meeting.
In NSW, non-hosted short-term rentals – where the property owner does not live on-site during the stay – is restricted to a maximum of 180 days a year in Greater Sydney and some regional areas.
Byron Shire Council introduced a 60-day annual cap in 2024.
Not all councillors agree caps are the way forward. Councillor Jess Miller, a member of Clover Moore’s Independents, said enforcement was near impossible.
Miller said part of the challenge was the state government’s short-term rental accommodation register did not collect clear data on which rentals were someone’s primary residence – such as a home owner who lived in Sydney half the year but leased their house on an Airbnb-style platform for the other six months – as opposed to non-primary residence short-term rentals, which were investment properties not lived in by the owner.
“If this government was legit about solving housing affordability using every lever available to them, they would be taking this seriously, but they’re not,” Miller said.
Labor councillor Zann Maxwell is proposing the council seek a voluntary affordable housing contribution from major platforms such as Airbnb and Stayz by requesting they provide a percentage of revenue raised from properties in the city that would go directly to community housing providers.
Maxwell’s council motion proposes that, if platforms did not sign up to the scheme, the council would consider lowering the nightly cap.
“I’m asking for a voluntary contribution scheme because the state government has limited council’s powers so much: the only lever we have is a nightly cap,” Maxwell said.
“It takes more than a year to establish, and even then, only if the state approves it. This scheme could get actual dollars flowing to people who actually need it right now.”
Millers Point residents have complained their suburb has become a resort of mini-hotels, where working-class cottages have been turned into luxury stays. Sydney’s oldest childcare centre announced its closure last year amid dwindling enrolments locals believe was connected to the rise of short-term rentals.
The NSW government is still considering feedback from the review, targeting as many as 90,000 holiday homes and vacant properties, commissioned three years ago. Treasurer Daniel Mookhey said at the time the booming industry was contributing to disappearing long-term rental stock in NSW.
A government spokesperson said policy changes were still being investigated.
Airbnb has argued blunt caps and bans would not solve the housing crisis, and that short-term rentals were used not only for holidays but for those travelling for medical treatment, for work-related travel and by those fleeing natural disasters.
Airbnb said in a submission to the City of Sydney’s Housing for All discussion paper that short-term rentals represented a “tiny fraction of the housing market” and were not the cause of the shortage.
“The vast majority of listed properties are primary residences and homes used periodically by their owners, making them unsuitable for the long-term rental market,” the submission said. Airbnb was contacted for comment.
Housing experts are divided on the role played by short-term rentals in housing affordability woes.
Nicole Gurran, a professor of urban and regional planning at the University of Sydney, said regulating non-hosted short-term rentals was “a no-brainer in the current [housing] situation”.
“The problem is the councils found the state government makes it difficult to do that. You need to change your planning controls … it took many years and a lot of money for Byron Shire to get [the 60-day cap] in place,” Gurran said.
However, Grattan Institute housing and infrastructure program director Andrew Barker said short-term rental properties only made up about 1 per cent of housing stock nationally and in Greater Sydney – in the City of Sydney it was closer to 5 per cent.
“People can choose to live in short-term rentals in nearby suburbs where there are fewer short-term rentals; there are nearby substitutes, and that means the short-term rentals will have less of an effect on rental vacancies or rents across Sydney.”
Given short-term rentals accounted for a small share of Sydney’s housing stock, Barker said, caps were “likely to be a bad idea and cut off the benefits for travellers and hosts without really doing much for rental availability or rental prices”.
“Levies are better than caps because they can generate revenue that can be used locally and they don’t prevent people from listing short-term rental accommodation altogether.”
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