NSW Short-Term Rental Laws: Snapshot into Current Laws & Proposed Changes for 2025

If you’re renting out a property on Airbnb, Stayz, or similar platforms in NSW, understanding property law is crucial to ensure compliance and protect your investment. As NSW property lawyers, we work with investors navigating short-term rental laws and making strategic decisions about their property investments in NSW.

Here’s what you need to know about the current Short-Term Rental Accommodation (“STRA”) regulations and the potential changes in 2025.

Current Snapshot: NSW Short Term Rental Laws

1. Nightly Caps on Non-Hosted STRA

  • If you’re not living in the property (non-hosted STRA), there’s a 180-night cap per year in Greater Sydney.
  • Outside Sydney, some councils impose their own caps, but many areas don’t have limits.

2. Mandatory STRA Registration

  • All STRA properties must be registered with the NSW Government’s Short-Term Rental Accommodation Register.
  • If your property isn’t on the register, you’re not legally allowed to rent it short-term.

3. Fire Safety and Compliance

  • STRA properties must meet minimum fire safety requirements, including smoke alarms, evacuation plans, and clear emergency exits.
  • Ensuring your property meets these standards is essential to avoid fines and liabilities. A NSW property lawyer can help review compliance obligations to keep your property investment in NSW legally secure.

4. Strata Can Ban STRA in Some Cases

  • Strata schemes can vote to ban STRA in buildings if the property isn’t the owner’s principal place of residence.
  • If the property is owner-occupied, strata cannot ban short-term letting.

5. Local Councils Can Impose Extra Restrictions

  • Some councils—like Byron Bay—have been pushing for stricter STRA limits due to rental shortages.
  • The NSW Government has so far resisted blanket bans but has allowed case-by-case council restrictions.

What’s Changing in 2025?

With rising rents and a housing crisis, the NSW Government is reviewing STRA rules. While no new laws have been passed yet, the following changes are being considered:

1. Lowering the 180-Night Cap

  • The 180-night annual cap for non-hosted STRA in Greater Sydney may be reduced, potentially to 90 nights per year.
  • Byron Bay has already proposed a 60-night cap, and other councils may follow suit.

2. Tougher Enforcement & Fines

  • The government is considering higher penalties for STRA hosts who:
    ✅ Fail to register their property.
    ✅ Exceed their nightly caps.
    ✅ Ignore fire safety requirements.
  • More compliance checks could also be introduced, making it harder for unregistered rentals to operate under the radar.This means investors may need to rethink their approach—or consult a NSW property lawyer to ensure compliance.

3. More Power for Local Councils

  • Councils may soon get greater control over STRA limits in their areas.
  • This could mean some suburbs banning STRA altogether, while others allow more flexibility.

4. Potential New Taxes on STRA Owners

  • Some politicians have floated the idea of a new levy or tax on STRA properties, similar to what Brisbane introduced in 2024 (a 50% council rate increase for STRA homes).
  • The goal? Encourage more landlords to return properties to the long-term rental market —a move that could reshape investment strategies in NSW real estate.

How Will These Changes Impact Property Owners?

If you own an STRA property in NSW, here’s what these proposed changes could mean for you:

Tighter rental caps could limit earnings, especially for investors relying on high short-term returns.
Higher compliance requirements may increase costs (e.g., safety upgrades, registration fees).
Councils may impose area-specific restrictions, creating uncertainty in some markets.
Potential new taxes or levies could reduce the profitability of short-term rentals.

However, not all hope is lost! If you operate a hosted STRA (where you live on-site), these changes are unlikely to affect you as much.

What’s Next for Short Term Rentals in NSW?

The NSW Government hasn’t locked in these changes yet, but with growing pressure to address housing shortages, stricter STRA laws seem likely.

For property investors, the key takeaway is to stay informed and be ready to adapt—whether that means shifting to long-term leasing, adjusting pricing strategies, or ensuring full compliance with registration and safety rules.

📢 Thinking about how these changes could impact you? Keep an eye on upcoming announcements, as 2025 could bring the biggest shake-up to NSW’s short-term rental market in years.

Disclaimer

We know most of you get this, but just to be clear—the information above is general and doesn’t consider your unique situation. Please don’t rely on it as a substitute for professional advice. We strongly encourage you to seek appropriate guidance for your specific needs.

Contact Us

If you need help with a property law matter,

please reach out to us at contact@jaidelaw.com.au or call us at (02) 9061 7090.