In an effort to soften soaring rents in Australia’s priciest city, the City of Sydney has pledged to investigate a short-term rental ban throughout the 26 square kilometre local government area.
The proposed ban, introduced by the Greens, would apply only to entire-home short-term rentals that are not primary residences. Hosts renting out their main home while away, or listing part of their residence, will be exempt.
This is not the first time that short-term rentals have been in the spotlight. Across the country, state and local governments have brought in various limits, levies and restrictions in response to the worsening rental affordability crisis.
But despite the measures, we are lagging behind on the global stage.
City of Sydney mulls suburb-specific ban
Currently, New South Wales legislation imposes a 180-day cap on short-term rentals within Greater Sydney, but the City of Sydney will investigate implementing further bans on short-term rental accommodation - with options ranging from specific suburbs bans, tying bans to a vacancy rate threshold or blanket bans on non-primary residences for certain periods.
Whether or not the decision will lead to cheaper long-term rents remains to be seen, according to experts.
The City of Sydney will investigate a ban on short-term rentals when a vacancy rate for rental housing dropped below 3%. Picture: realestate.com.au
Anne Flaherty, a senior economist at PropTrack, said that in theory the ruling should lead to more rental homes available in the inner city.
“There's no doubt this policy would add to supply. But the extent to which it will add to supply - we're not really sure of yet,” she said.
“We just don't have enough homes for people to rent. And although there is an argument that people should be able to do what they want with their own property, we're getting to a point where maybe emergency measures are needed.”
To get an insight on how a ban might impact Sydney, Ms Flaherty said we should look abroad.
“What we’ve seen globally is that after a ban comes in, typically, there is an increase in the number of rental properties that hit the long-term rental supply. So that's a positive,” she explained.
Realestate.com.au senior economist Anne Flaherty says globally, bans increase long-term rental supply but don't love the needle on prices.
“However, when we look at rent [prices] it doesn't seem to have too much of an impact. On average, the total increase in rental stock that comes about from such a ban is usually less than 10% - not enough to meaningfully alter where rents are sitting.”
Alternatively, Flaherty added that governing bodies should carefully consider how such rulings might impact investors.
“Any anti-investor policies could be a big hit to rental supply as they will drive more investors to sell. It's also going to be a massive disincentive for people to buy investment properties, which is going to have dire consequences for the supply of rental properties over the coming years.”
A long time in the making
The move would effectively see platforms such as Airbnb and Stayz almost abolish listings in inner-city Sydney, where vacancy rates in some suburbs are currently below 1% - well under a 'healthy' vacancy level of about 3%.
This is not the first time that short-term rentals have been in the spotlight. In 2021, the NSW Government imposed a 180-day cap on Sydney rentals. By 2023, Byron Shire approved a much stricter 60-day cap in most areas.
A strict 60 days per year limit is enforced on non-hosted short-term rental accommodation across most of the Byron Shire. Picture: realestate.com.au
Other states followed. In 2025, Victoria introduced a 7.5% short-stay levy and gave councils and owners corporations more power to cap, restrict or ban short stays.
Brisbane City Council cracked down on short-term rentals in the same year, focusing on low-density residential suburbs and reportedly removed approximately 500 homes from the holiday rental pool. On July 1 this year, the Queensland capital will make permits mandatory for short-stay operators.
The City of Hobart now charges higher rates for short-stay properties, and the City of Adelaide applies commercial rates.
A worldwide movement
Although Australia is making significant moves to give long-term renters more choice, we are lagging behind on the global stage.
In 2010, New York City amended its Multiple Dwelling Law to restrict most rentals of entire apartments for fewer than 30 days. As of September 2023, the Big Apple essentially banned the short-term rental of entire apartments, also requiring that hosts are present with no more than two guests allowed.
From 2014, Paris required most hosts to register, and by 2018, it imposed a 120-night annual cap (later reduced to 90 days in 2025) on primary residences, and heavily regulated second homes.
Short-stay accommodation is limited to 90 days per calendar year in Paris. Picture: Getty
Barcelona stopped issuing new licences for tourist apartments in 2014 and by 2028 will phase them out altogether. Singapore scrapped short-term rentals of less than 90 days in private residential properties in 2017. Amsterdam, Athens and Berlin are also set to impose strict restrictions all within the next 12 months.
Despite a global shift towards short-term rental restrictions, few cities can show that rents have fallen as a result.
According to a study of Barcelona by the Journal of Housing Economics, the changes mostly reduced illegal listings and prevented the further conversion of homes into tourist accommodation.
Impact on rents
Sarah Elkordi, founder and director of The Rent Fairy in Sydney, said free-range short-term rentals allow investors to lean towards a quick financial reward.
“In all honesty, short-term stays have drowned out a lot of available long-term rentals. People who are doing this prefer it because it's quick turnaround, it's quicker money, and less responsibility in terms of maintenance and rental increases,” she said.
Under the proposal, non-hosted short-term rentals in suburbs like Sydney's Millers Point could be banned from Airbnb and Stayz. Picture: realestate.com.au
“I do think a ban or restriction will improve the overall rental situation for Sydney in the long run. A lot of people right now cannot afford to rent one-bedroom apartments on their own long-term. They’re priced out of the properties that tourists would normally go to, which only pushes those landlords more towards Airbnb for the quick cash.”
Ms Elkordi added that while no one should expect a dramatic drop in Sydney rental prices off the back of City of Sydney’s potential move, there will be benefits.
“It may increase the quality of properties. So many rentals in Sydney are shocking, but tenants are going for them because there’s just no other option. This could open the door to a higher standard of quality. Those landlords who are trying to achieve high rents for poor quality homes will definitely get a wake up call.”
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