Can Strata Ban Airbnb in NSW? Short-Term Rental Rules Explained

You find a one-bedroom apartment near the beach, run the numbers on short-term letting, and the yield looks far better than a standard 12-month lease. Then you read the strata by-laws and there is a clause banning short-term rental accommodation entirely.

That by-law is probably valid, and it probably kills the plan. It is one of the few restrictions in NSW strata law that can change the financial case for a purchase outright, and it is easy to miss because it sits in the by-law register rather than the contract.

Here is how the rules actually work, and what to look for before you sign.

There are two separate sets of rules

Most confusion about Airbnb and strata comes from treating this as one question. It is two, and both have to say yes before you can legally let a property short-term.

1. Planning law. State planning rules and your local council decide whether short-term rental accommodation (STRA) is permitted at that address at all, and for how many nights a year.
2. Strata by-laws. Separately, the owners corporation of your building can pass a by-law prohibiting it, within limits set by the Strata Schemes Management Act 2015.

A council can permit 180 nights a year and your building can still ban it. Passing the planning test tells you nothing about the strata test.

What a strata by-law can actually ban

On 10 April 2020, section 137A was inserted into the Strata Schemes Management Act 2015 by the Fair Trading Amendment (Short-term Rental Accommodation) Act 2018^[1]. Before that, whether a scheme could stop short-term letting was genuinely unsettled, and several buildings had by-laws of doubtful validity.

Section 137A settles it. An owners corporation may, by special resolution, make a by-law prohibiting a lot from being used for short-term rental accommodation if the lot is not the principal place of residence of the person conducting the arrangement^[2].

Read that as a straight split between two kinds of listing:

The principal place of residence carve-out

This is the part people get wrong in both directions. Owners assume a by-law shuts down all short-term letting; committees sometimes try to enforce it that way.

If the lot genuinely is your principal place of residence, a section 137A by-law does not reach you. You can let the whole apartment while you are travelling, or let a room while you remain there. Your principal place of residence is where you actually live, not simply an address you have nominated somewhere.

Two things worth being clear-eyed about. First, the carve-out is about the by-law only. The planning rules and registration duties below still apply to a hosted listing. Second, a by-law that bans non-resident short-term letting is not the only tool a scheme has: ordinary by-laws on noise, common property, parking, security access and rubbish still apply to your guests, and are the usual route a committee takes when a listing causes friction.

How a scheme passes one of these by-laws

A section 137A by-law needs a special resolution at a general meeting, which under the Act means the motion fails if more than 25% of the value of votes cast are against it^[3]. That is a meaningfully higher bar than an ordinary majority, but in an owner-occupier-heavy building it is not a hard one to clear.

Which is the risk that matters for a buyer. The absence of a ban today is not a guarantee for tomorrow. If a building is 80% owner-occupied and the minutes show repeated complaints about short-stay guests, you are looking at a scheme that has both the motive and the votes to pass one. The by-law register tells you the current position; the minutes tell you which way it is heading.

Once passed, the by-law is registered with NSW Land Registry Services and binds current and future owners of every lot. Buying in afterwards does not exempt you.

The council layer: day limits and the STRA Register

Even where the by-laws are silent, the planning framework applies^[4].

Day limits on non-hosted stays. Non-hosted STRA, where the host is not present, is capped at 180 days a year in Greater Sydney, Ballina, the Clarence Valley and Muswellbrook. Byron Shire is tighter: since 23 September 2024 most of the shire is limited to 60 days a year, with two precincts permitted to operate year-round. Elsewhere in NSW, non-hosted letting can generally run all year unless the council has set its own limit. Hosted stays, where you live on site, are not subject to the cap.

Registration. STRA properties must be listed on the NSW STRA Register. Registration costs $65, with a $25 renewal each year from the original registration date.

Code of Conduct. A mandatory Code of Conduct for the short-term rental industry commenced on 18 December 2020 and is administered by NSW Fair Trading^[5]. It sets minimum standards for booking platforms, hosts, guests, letting agents and facilitators.

Fire safety. STRA dwellings have to meet a fire safety standard under the Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021, including interconnected smoke alarms and an evacuation plan. In an older apartment this can be a real cost, and it is one buyers routinely leave out of their yield calculation.

What to check before you buy

If short-term letting is part of why you are buying, treat it as a due diligence item with the same weight as the sinking fund balance. From the strata records:

• The full by-law register, including registered changes. Search for “short-term”, “holiday”, “serviced apartment” and “letting”, not just “Airbnb”. By-laws rarely name a platform.
• General meeting minutes for the last two to three years. A motion that was proposed and lost is a strong signal it will come back.
• Committee meeting minutes and correspondence for complaints about short-stay guests, key or fob access, or after-hours noise.
• The owner-occupier ratio, which tells you who holds the votes on a special resolution.
• Any by-law requiring minimum lease terms (for example, no letting for less than three months). This achieves the same result without ever using the words short-term rental.

Then check the planning side separately: the council's STRA position for that address, and whether the 180-day or 60-day cap applies. A yield model built on 300 nights in a 180-night council area is wrong before the by-laws are even considered.

If you already own and a ban gets passed

A validly made section 137A by-law binds you, even if you bought on the assumption you could let the lot short-term. There is no grandfathering in the section.

The realistic options are to attend the meeting and vote (proxies matter here, and most by-laws of this kind pass in rooms where investors did not turn up), to check whether the lot is or could become your principal place of residence, or to shift to longer leases. If you believe the by-law itself is invalid, for instance because it purports to restrict principal-place-of-residence letting, that is a dispute for NSW Fair Trading mediation and then NCAT, and it is worth getting advice before spending money on it.

Key takeaways

• A NSW strata scheme can ban short-term letting by special resolution, but only for lots that are not the host's principal place of residence (section 137A).
• Letting your own home while you are away is protected from that by-law.
• Planning rules apply on top: 180 days a year for non-hosted stays in Greater Sydney and several other areas, 60 days across most of Byron Shire, plus registration, a Code of Conduct and a fire safety standard.
• No ban today does not mean no ban next year. The minutes and the owner-occupier ratio are the leading indicators.
• Search the by-laws for minimum lease terms as well as explicit short-term rental clauses.

If you are weighing an apartment purchase more broadly, our strata due diligence checklist covers the rest of the report, and the guide to pet by-laws works through the other by-law that most often catches buyers out.

This article is general information, not legal advice. By-laws and council rules vary by building and by address. Check the specific by-law register and the relevant council's position before making a purchase decision.