Governments across Australia have been urged to take a more hard line stance in dealing with issues associated with the growing short term rental sector.


But rather than ban the practice, which has been made popular by the rise of platforms such as Stayz and Airbnb, state and local governments should hand down tougher penalties when the use of a dwelling as a short term rental breaches the amenity of other residents.


According to the Peer-to-peer pressure, How the government should make the most of the sharing economy report, which was released last week by think-tank the Grattan Institute, stiffer penalties and clearer regulations would reduce the number of negative incidents that arise from short term rentals.


“Appropriate regulation of short-stay accommodation will require changes to local government practices and to state government limits on owners’ corporations powers,” the report said.


“Finding an acceptable balance among competing concerns can be difficult, but laws should help people limit unreasonable noise and loss of amenity, while not unduly restricting the use of property for short stays.”


For councils, the report claims they should focus more so on punishing short stay hosts when breaches of amenity occur, rather than trying to stop short term rentals.


“State and local government regulations governing short-stay rentals need to be changed. In some areas, rules are too restrictive. In others, neighbourhood amenity is not protected.”


“Local governments should allow short-stay rentals but control disruptions.”


When disruptions do occur, councils should respond with fines and other sanctions including prohibiting the use of a dwelling as a short term rental for repeated breaches.


The process for making a complaint and it being investigated should also be improved.


“All states have environmental laws and regulations aimed at managing neighbourhood disturbances such as from excessive noise. If the laws are breached, local council officers or the police have the power to issue fines.”


“But in many states, the process for making an application is cumbersome, expensive and can take time to enforce.”


Similarly, state governments should act by giving owners’ corporations expanded powers.


“State governments should also make it easier for owners’ corporations to enforce rules, particularly for repeated breaches. When there are persistent breaches, state tribunals should be empowered to bar short-stay rentals in that property for a period of time.”


“Empowering owners’ corporations in this way should improve amenity for residents of multi-dwelling complexes. Hosts would probably try hard to ensure their guests adhere to owners’ corporation rules. They may be able to require a bond at the time of booking, and to recover owners’ corporation fines from short term tenants.”


The report broadly supports the expansion of short term rentals, but it does acknowledge state governments could leave the decision of allowing the use of a dwelling solely for short term rental up to individual owners’ corporations.


“If the reforms proposed… are judged by governments to be insufficient, governments should permit owners’ corporations to vote on whether to prohibit full-time short-stay letting of properties not lived in by the owner.


“State governments should ensure that owners’ corporations cannot prevent owner-occupiers from occasionally renting out their properties short-term, or from renting out single rooms in their properties short-term while they are living in them.”