[+] Contagion: Anxious Watch as Short-Stay Curb Hits Byron Values

Chris Hemsworth and Zac Efron have packed their bags and it appears investors are about to do the same at Byron Bay. The reign that short-term rentals accommodation has over the housing and hotel markets is coming to an end and property prices in Australia’s most expensive city are taking a huge hit. This litmus test will have broader implications on the feasibility of development in holiday hotspots and the decisions of councils nationwide, including Melbourne. Byron Shire Council issued its first fine for unauthorised holiday letting last week; $12,000 to a Suffolk Park property owner for exceeding the 180-day short-term rental limit. Real Estate Institute of NSW president Barry Johnston says it is an interesting exercise and frustrating for people who love the area. “You hear about the Byron Bay market and you think it’s just going to go from strength to strength,” Johnston says. “I’ve just spoken to an agent I know well up there, a buyer’s agent and, also, I have a client with hundreds of millions of dollars who owns a lot of property up there. “I’m just blown away from what I am hearing. ▲ The NSW government has imposed a cap on non-hosted short-term rentals for Byron Shire. “The agent said values have come off by up to 27 per cent since the peak of December 2021.” Byron Shire mayor Michael Lyon says the Beachside Drive property owner’s fine could be the first of many for landlords. “The council will be pursuing the payment of these fines and I hope it serves as a warning to other property owners,” Lyon says. “We are taking the regulation of rules surrounding short-term rental accommodation extremely seriously, particularly ahead of the introduction of the new 60-day cap that will apply from September. “The council has been very proactive in relation to curbing short-term rental accommodation in parts of the Byron Shire to encourage more housing stock to be returned to the rental market.” The REINSW president says the cap won’t fix housing supply issues but instead hurt the local economy—and there are other options. “Byron and Ballina councils are extremely slow at approving DAs for new housing,” Johnston says. ▲ Real Estate Institute of NSW president Barry Johnston says the cap will drive people to sell their Byron Bay homes, not convert them to long-term rentals. “They don’t want to see development going on so this is their answer to providing new housing. “They might have intended this policy shift to help increase the supply of housing for permanent rentals but it is unlikely to achieve that. “All that’s going to happen is a lot of people are probably going to sell. “Less people will go there so it will have an impact on the local economy. “There are plenty of other beautiful places on the New South Wales coast.” Johnston says changes in the market will slow the number of new developments, builders and cleaners will lose jobs, tourism will drop and there are already shops there that cannot be rented out. In January, 2022 a 180-day cap was introduced following recomentations by the NSW Independent Planning Commission and the further drop to 60 days is supported by the state government. ▲ Byron Bay has slowly but surely changed from a holiday destination with its own distinct style to an enclave of the rich, say critics. Johnston says the changes are too rapid, reducing for 365 days to 60 in less than two years. “The other point to consider is why wouldn’t they put everyone on notice and say we are going to go 180 days, to 150 days next year then 120 days,” he says. “How do you do that and expect there’s not going to be any consequences? “To make such important changes without recognising the investments people are making is really undermining the confidence of property investors. “If you’re going to sell your house in Sydney and you want to make Byron Bay your home you would be rubbing your hands together and saying ‘fantastic’. “I think the really wealthy people probably won’t worry and will just hang on.” Byron Bay may have held the title of the most expensive place to live but that led to another title—hosting as the highest rate of rough sleepers in the country. Flooding in early 2022 deepened the problem. The council released its plan to house the shire’s population late last year and is in consultation on proposed changes to the Local Environmental Plan 2014, closing on January 29. Work is also under way on the Housing Options Paper to deliver housing through infill, vacant land, new release and increased housing diversity, which will be submitted to the state government this year. ▲ Other government bodies, here and overseas, are imposing similar caps on short-term rentals as Byron has. However, Byron is not the only council implementing changes to Airbnb, Stayz listings and the likes. The City of Melbourne reports 14 per cent of its 4100 residential properties are used for short stays. The council is drafting a local law for owners to register their STRA properties and also cap the number of days allowed, potentially to 180 days. The changes were expected to be considered for adoption in February meetings, however this has been reportedly delayed. While accommodation at Byron without short stays is limited, in Melbourne more than 10,000 hotel rooms have become available in the past two years and 1200 are under construction. Regardless of changes to STRA caps, experts predict the hotel market will see further growth in occupancy and daily rates this year. In Brisbane, the council announced in June last year funding for a Short-Stay Accommodation Taskforce that has 12 months to develop regulations for the fast-growing sector. The council already charges a Transitory Accommodation Rating category surcharge which was lifted to 65 per cent from the 50 per cent set when it was introduced in 2022. Abroad, the European Union, the US and other nations are experiencing similar housing issues. ▲ Residential towers in New York’s Manhattan Mid-Town. Airbnb senior housing economist Taylor Marr says changes in New York to restrict short-term rentals did little to reduce rent prices or increase stock. “Many have argued that removing the ability to host short-term renters will open up tens of thousands of available rental units in the city,” Marr says. “Yet, more than four months after New York City’s short-term rental rules went into effect, there has been no detectable increase in available rental inventory and rents have only risen further. “Policymakers should continue to focus on reforms that encourage new housing construction throughout the region to address the root cause of the affordability challenges.” Marr adds there are simply higher hotel prices and an unregulated black market for short-term rentals in the city. The company introduced the Airbnb Housing Council on January 17 in the US to share its advice to cities on shaping short-term rental policies. In November the European Union introduced new rules that could lead to limiting access to short-term rentals after 547 million nights were booked via four online platforms. The measures include the registration of hosts, security for users and data sharing with local authorities to contribute to tourism statistics. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Contagion: Anxious Watch as Short-Stay Curb Hits Byron Values

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