- Reform introduces state-wide register, development approval required for properties rented for over 90 days.
- $10K incentive scheme to encourage long-term rental conversion.
- Mixed industry response to changes, clarity on regulations welcomed, enthusiasm for incentives muted.
The Western Australian (WA) Government announced a slew of new regulations for un-hosted Short-Term Rental Accommodation (STRA) this Wednesday, together with a $10,000 incentive to convert some STRAs to the long-term rental market, potentially giving it a much-needed bump in supply.
The reforms are expected to ensure congruity across the sector and clarify rules governing the operation of STRA properties.
New state-wide register
Property owners will have to register all STRA properties in WA before advertising them or taking bookings.
Registrations are expected to open in the middle of 2024, and all STRA properties must be registered by 1 January 2025.
To remain on the register, STRA property owners who are required to obtain development approval must give their development approval number upon registration or by 1 January 2026, if subject to the latest planning requirements.
Specifically, un-hosted STRA property owners must acquire development approval from their local government if their property will be rented for more than 90 nights in 12 months.
Furthermore, planning requirements in the Perth metropolitan area will be modified. Un-hosted STRAs operating for over 90 nights will need approval from the local government. In regional areas like Peel, local governments will decide when planning approval is necessary.
Additional guidance on STRA land uses in planning schemes and frameworks will be provided to local governments. Importantly, the reforms do not impose any hard limits on the number of nights a hosted or un-hosted STRA property is rented out for.
STRA incentive scheme
In conjunction with the state-wide STRA register, the Cook Government has introduced the STRA Incentive Scheme, which will operate for six months. The scheme aims to coax property owners to transform short-stay rentals into long-term rental properties, increasing the state’s supply amid record low vacancies.
Perth residential vacancy rates
Property owners who move their STRA properties to the long-term rental market will be offered a $10,000 payment under the scheme.
To be eligible for the payout, property owners must have had a property for rent on a short-stay booking platform within the past six weeks.
Applicants must also give their new tenants a minimum 12-month lease agreement through the Residential Tenancies Act 1987.
Moreover, to ensure that the new homes are affordable, there will be a restriction on the maximum rent chargeable. In Perth, rents will be capped at $800 per week, while South West rents will be capped at $650 per week.
The payments will be made through a two-stage process where a $4000 payment will be made once eligible applications are approved, with the subsequent $6000 paid after the long-term tenancy rental agreement reaches a year.
Property owners interested in the scheme can now submit their Expression of Interest (EOI) online, with the application process being expected to start by 2023’s end.
Sector welcomes reforms, but response to incentive muted
Easy Home Rentals director, Prak Sangthong, warmly received the Cook Government reforms, believing that the changes will give the sector more clarity regarding STRA compliance.
“We knew that the changes in the legislation were coming, so there was no surprise,” Sangthong told The Property Tribune.
“We welcome consistency throughout the WA planning policy. At the moment, there are all the different local governments with different local requirements. By having a, hopefully, clear and simple process, it makes it easier for the owners and the operators.”
However, his reaction to the incentive scheme was more subdued.
Sangthong explained that property owners who go into the short-term rental accommodation market often have an aversion to entering the long-term rental market.
Some have had bad experiences with long-term tenants, while others might still use their properties occasionally.
“I don’t believe it will make any difference,” he commented.
“The reason for that is very simple. People who do short-term do it for very particular reasons. There are some owners who are required to use the property from time to time, and they don’t want to have it stuck in the long-term rental process.
“So when they want to come back and stay there, they have a home to go to without having stress.
“There are many owners we look after who have had a bad experience with long-term tenants, where there was trash, vandalism, and rent was not paid.”
“They’ve had such a bad experience in long-term rental. It doesn’t matter how much you pay them; they are still not going to go back into the long-term rental process.”
Prak Sangthong, Director of Easy Home Rentals
“Personally, I’m a property investor as well. I’ve had houses that were badly vandalised and trashed by tenants and unpaid rent. By the time we went through the process of evicting them and claiming insurance. We were getting back cents in a dollar in terms of what we actually lost.”
REIWA response
Real Estate Institute of Western Australia (REIWA) CEO, Cath Hart, had a similar, moderate response to the incentive scheme.
She commended the government’s commitment to alleviating the rental crisis and conceded that the assistance could have some benefit.
However, she believed the government’s focus on short-stay accommodation was misguided.
“The short-stay market is not the silver bullet for the rental issues we are facing. According to research by the Real Estate Institute of Australia (REIA) earlier this year, entire short-stay dwellings that may be suitable for long-term rentals only make up a small percentage of total dwellings and the ratio to private rental dwellings was generally low,” she said.
“In addition, not every owner is in a position to transfer their property and not every short-stay property is appropriate for the long-term rental market.
“However, for some short-stay owners, this incentive may encourage them to make the switch. We need every long-term rental we can get at the moment, and if it does boost rental supply, even marginally, then that’s a positive.”
Peak community service bodies respond
On the other hand, peak bodies for community services, housing and homelessness, Western Australian Council of Social Service (WACOSS) and Shelter WA, had high praise for both the reforms and incentives scheme.
“Essential workers and some of our most vulnerable people like single-parent families have been struggling to keep a roof over their heads – while houses are sitting empty for significant periods of the year,” said WACOSS CEO, Louise Giolitto.
“These reforms will boost housing supply and hopefully reduce the demand for affordable houses for lower-income families.
“We commend the Cook Government for activating every lever available to make more housing available.”
Shelter WA CEO, Kath Snell, echoed Giolitto’s sentiment.
“With this announcement, we congratulate the Cook Government for the courage to introduce an incentive to increase urgently needed rental supply,” she said.
“We have provided the WA government with data on the impact of the Short Stay Rental Market – including the sobering finding that in WA right now, there are approximately three short-term rentals for every one private rental currently listed.”
“If these reforms incentivise just one-quarter of the Airbnbs into rental housing, that will literally double the current rental supply in WA.”
Kath Snell, Shelter WA CEO
“About half of all Airbnbs currently listed (just under 4000 homes) are one and two bedrooms homes, we expect to see this $10,000 incentive attract more of these properties into the rental supply.
“The metro-based decision to ensure all short-term rentals must go through planning approval (with a 90-night exception) should definitely see more properties return to the long-term rental pool.”
