In popular beachside locations like ours, it is not uncommon for the owner of a house in a residential zone to let it out for short-term stays. I know of families that move out of their houses over the Christmas/New Year break and let them out to holiday makers. The weekly rental often pays for or subsidises an overseas family holiday.
A recent Land and Environment Court judgement casts doubt over whether this practice is lawful. The house in the case was located in Terrigal and listed for short-term rentals via the “Stayz” website.
Unfortunately the property was often used to host Hen’s parties and Buck’s night’s and the resultant late-night partying, noise et cetera became unbearable for the adjoining owner who brought a case against their neighbour.
The Court found that renting out a home in 2(a) residential zone for short-term holiday letting is prohibited and in breach of the Environmental Planning and Assessment Act.
The Court concluded that a tenancy granted to persons residing in a group situation for periods of up to a maximum of one week for the purposes of “buck’s and hen’s nights, parties or for the use of escorts or strippers is not consistent with a use or occupation by a family or household group in the ordinary way of life and therefore not consistent with the use of the property as that of a ’dwelling house’”. There was no other applicable land-use permissible in the residential zone that could conceivably authorise tourist accommodation.
The Court did note that some short term stays may nevertheless satisfy the definition of a dwelling house giving examples such as a holiday house that is used exclusively by a family for a limited amount of time each year or a house owned by a company and rented out to executives and their families for short durations.
The decision has implications for property investors and the Tourism industry generally on the NSW coast. Gosford Council has responded to the decision by preparing a planning proposal to amend its current LEP to deal with short-term holiday letting of residential dwellings in identified zones. Although the Court’s conclusions are specific to the provisions of the Gosford planning scheme, the decision could have implications for other Councils that contain similar clauses in their LEP’s.
If you are thinking of buying an investment property and intend to let it out as holiday accommodation you will need to make sure that you check the relevant local environment plan carefully and take some town planning advice before committing to the purchase.
This guest blog was provided by Sam Couper of Couper Lawyers.
Image compliments of Salatore Vuono and freedigitalphotos.net