[Carmel Waters]

Hello, We have been asked by our affordable housing implementation group the possibility of a special rate applied to residential dwellings being used for short-term rental accommodation. Any information would be appreciated. Thank you

[Darryl Telfer]

Hi Carmel,

Your post brings back some very very baaaad memories for me.

Of course the usual Special Rate requirements under the LGA would first need to be met including having Council form an opinion around benefit etc per S495

I made a presentation on this subject to the RPNSW annual conference at Terrigal in 2016 – basically a “what not to do” case study. I don’t have a copy of that presentation now but the NSWRP exec team may being able to track it down among the conference program for that year. Anyway, in a “long form” summary, this is what it was about.

The former Wyong Shire Council had just introduced such a creature (Special Rate on short term rentals) when I started there in 1996, a special rate levied on 3 classes of properties being:
1. those categorised as Business within a suburb, lets call it suburb A
2. Major facilities servicing tourism within Suburb A and several surrounding suburbs – with specific definitions of the properties including major shopping centres, hotels, motels, service stations, caravan parks – can’t recall everything exactly, and;
3. Residential properties within 3 or 4 suburbs (around and including suburb A) used and/or available for short term rental (as per your question).

This group (3) proved very problematic and time/resource hungry to administer. An initial “opt out” survey was issued to owners of residential properties in the defined suburbs, where the mailing address was not the actual property (i.e. potentially non owner occupants. Those that did not respond were subject to the special rate.

Despite the Special Rate being clearly set out on each annual rate notice, and the fine print explaining the appeal against levies process (who reads those anyway!) thereafter, we had many ratepayers appeal against it over the following years, some 10 or more years later, demanding refunds for previous years etc. Along the way we tweaked the internal processes to alert new owners, monitor for changes in addresses (to or from the property), new developments/DA but this just added band aids to a festering wound.

All of this goes against one of the basic principles of rating I have come to appreciate – the principle of not creating a monster!

The real problem was “proving” the properties were/were not used and/or available for short term rental – at this time AirBNB wasn’t a thing and even the internet wasn’t widely used so evidence was hard to get. This resulted in substantial inequities i.e. the honest ones would accept the levy and move one, others would contest it and via stat dec state it was NOT used for short term rental etc. Of the remainder, no doubt many were just weekenders for occasional family use but if they gave a stat dec, it was virtually impossible to challenge it. Over time the revenue from that group slowly diminished.

After 10 or maybe 15 years (of pain) and with a change in management within Council, we were able to convince Council that it just wasn’t worth the effort and the special rate was dropped from short term rentals with that revenue simply added to Council’s Ordinary Rates.
From memory we did this when a reval happened and a change from base rate to minimum rate was implemented, but the average extra on all other ratepayers was less than $2 p.a. from memory (of course the reval and change in rate structure disguised this).

My advice remains – Don’t do it!

[Suzi Flynn]

Thanks for sharing Darryl. I remember your presentation at the conference. It was very interesting. Perhaps the RP can locate it and share again.

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