Sydney’s ongoing rental crisis has pushed affordability and housing supply to the forefront—and now, short-term rentals are once again under scrutiny.
The City of Sydney is considering a significant shift: a potential ban on certain short-term rental properties, particularly entire homes that are not used as primary residences. The goal? To ease pressure on the long-term rental market in one of Australia’s most expensive cities.
What’s Being Proposed?
The proposal, introduced by the Greens, targets entire-home short-term rentals that are not the owner’s primary residence.
However, not all hosts would be affected:
- Renting out a primary residence while away would still be allowed
- Partial rentals (such as a room within a home) would remain exempt
The City is exploring multiple approaches, including:
- Suburb-specific bans
- Restrictions based on vacancy rates
- Temporary or blanket bans on non-primary residences
This comes on top of existing NSW legislation, which already limits short-term rentals in Greater Sydney to 180 days per year.
Will This Actually Lower Rents?
That’s the big question—and the answer isn’t straightforward.
According to PropTrack economist Anne Flaherty, increasing restrictions on short-term rentals should, in theory, boost long-term housing supply.
However, the real-world impact may be limited.
Globally, similar policies have shown:
- A modest increase in rental supply (typically under 10%)
- Little to no significant drop in rental prices
The core issue remains: there simply aren’t enough homes available.
The Risk for Investors
While the policy aims to support renters, it could have unintended consequences.
Stricter regulations may:
- Discourage property investment
- Push current investors to sell
- Reduce future rental supply
Over time, this could tighten the market even further—highlighting the delicate balance between regulation and maintaining investor confidence.
Part of a Bigger National Trend
Sydney isn’t alone in taking action.
Across Australia, governments are tightening controls on short-term rentals:
- Byron Bay introduced a stricter 60-day cap
- Victoria implemented a 7.5% short-stay levy
- Brisbane removed hundreds of properties from the holiday rental pool
- Hobart and Adelaide increased rates for short-term rental properties
These changes reflect a growing effort to prioritise long-term housing availability.
A Global Movement
Internationally, cities have already taken more aggressive steps:
- New York City has effectively banned most short-term apartment rentals
- Paris enforces strict caps and registration requirements
- Barcelona is phasing out tourist apartments entirely by 2028
- Singapore prohibits rentals under 90 days in private homes
Despite these strong measures, most cities have not seen significant rent reductions—though they have succeeded in limiting the growth of short-term rental listings.
What This Means for Sydney Renters
With vacancy rates in some Sydney suburbs sitting below 1%, the market remains extremely tight.
Industry experts suggest that while a ban may not dramatically lower rents, it could still bring meaningful improvements:
- More properties returning to the long-term rental pool
- Better quality standards across rental listings
- Reduced competition between tourists and long-term tenants
As highlighted by rental expert Sarah Elkordi, many tenants are currently forced to accept lower-quality homes due to limited options—something these changes could begin to address.
The Bottom Line
Sydney’s potential crackdown on short-term rentals reflects a broader shift in how cities are tackling housing affordability.
While it’s unlikely to deliver an immediate drop in rents, it could:
- Increase supply
- Improve housing quality
- Rebalance the market over time
However, long-term solutions will still depend on one critical factor: building more homes.
