A push to ban property investors from running short-term rentals in the City of Sydney has been ruled out under state planning laws, with councillors floating alternative proposals to free up more homes for long-term renters. The options include a 30-day nightly cap or voluntary affordable housing contributions from booking platforms.
Councillors are calling on the Minns government to release the findings of a review into short-term rental accommodation announced in 2023, or give councils more enforcement powers. The City of Sydney's chief planner determined only the state government has the power under NSW planning laws to move forward with a ban.
Greens councillor Matthew Thompson said the issue requires a statewide solution. "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," he said.
The council this year voted to investigate 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. All options were ruled out by council staff advice.
Sydney's short-term rental market had 15,683 active listings as of September, according to figures from AirDNA. In NSW, non-hosted short-term rentals are 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. Independent councillor Jess Miller said enforcement is near impossible. She noted the state government's short-term rental accommodation register does not collect clear data on which rentals are primary residences versus investment properties. "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 a voluntary affordable housing contribution from major platforms such as Airbnb and Stayz, requesting they provide a percentage of revenue raised from properties in the city to community housing providers. If platforms do not sign up, Maxwell's motion proposes council 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."
The NSW government is still considering feedback from the review commissioned three years ago. Treasurer Daniel Mookhey said at the time the booming industry was contributing to disappearing long-term rental stock. 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 are used for holidays, medical treatment, work-related travel and by those fleeing natural disasters. In a submission to the council's Housing for All discussion paper, Airbnb said short-term rentals represent a "tiny fraction of the housing market" and are not the cause of the shortage. The vast majority of listed properties, it said, are primary residences and homes used periodically by their owners, making them unsuitable for the long-term rental market.
Housing experts are divided. Nicole Gurran, professor of urban and regional planning at the University of Sydney, said regulating non-hosted short-term rentals is "a no-brainer in the current [housing] situation." She noted councils find it difficult under state rules. However, Grattan Institute housing and infrastructure program director Andrew Barker said short-term rental properties make up about 1 per cent of housing stock nationally and in Greater Sydney, though 5 per cent in the City of Sydney. He argued caps are likely a bad idea and that levies are better.