How will short-stay rental caps impact investment in Byron Bay?

On Byron Bay’s spectacular stretch of coastline, controversy may be rolling in with the tides, but most investors see only golden days of sunshine, sand and gloriously calm waters ahead.

Debate has been raging over the Byron Shire Council’s decision – now approved by the NSW government – to cap some short-stay rentals at 60 days, down from 180, and its impact on those buying property in the area.

“But many investors buy holiday homes in the areas that are now going to be exempted from all caps,” says Janelle Montano, the owner of short-stay management specialists Your Luxury Escape. 

“In the beachfront locations, like Lawson Street fronting Main Beach, and a number of streets back, where it’s all holiday accommodation, they’re now going to be allowed to rent out properties for up to 365 days. It’s only in neighbourhoods where it’s mostly residential where the new cap will operate.”

Besides, most investors buy with the intention of eventually retiring to Byron, she advises, and therefore only tend to want to rent their homes out at odd times to cover some of their expenses when they, their family and their friends won’t be using them. The new reduced 60-day cap will probably still be plenty for them.

As summer approaches, that sangfroid attitude to the new measures, designed to persuade some to put their short-stay houses and apartments back into the long-term residential rental market because of the critical shortage of rentals in the area, is remaining surprisingly chill. 

“This may reduce the weekly rents paid in the long-term rental market, but it depends on whether the owners of properties in the 60-day cap area will shift their property to long-term rental,” says Matt Lewison, chief executive of property investment advisors OpenCorp.

“Some, or many, of them may still make more money renting at a daily rate for 60 nights a year versus the long-term rental market. They would just be more selective about which dates they offer the properties for short-term rental.”

Property prices in the area continue to be high, with the median house price in Byron Bay currently sitting at $1.875 million and the apartment median at $1.51 million, so it tends only to be the wealthier end of the market who invest there anyway.

And it’s certainly not going to put any of those off, predicts Liam Annesley of Byron Bay Real Estate Agency. “It hasn’t taken the shine off Byron at all,” he says. “Most people investing here tend to be rich-listers who are buying for an escape, to get away, and holiday letting was never a big part of their plans. 

“For those who want to raise some money to pay bills and land tax, they’ve still got 60 days, so they can still earn some money in the peak period, but most want to use the homes themselves.”

Su Reynolds, director of Byron Bay First National, agrees. “Holiday investors buy property here primarily for their own use and the income is secondary,” she said. 

“With the tightening of supply of holiday properties for rent, I believe tariffs will increase and owners will still be able to achieve a decent income. It’s likely that that prices of properties in the areas zoned for year-round holiday letting will increase, too.”

Turn on property alerts

Get alerts about properties that match your search.

Set up alerts