2021-10-12 P&E Agenda - Item 2 - Attachment 6 - Cost Benefit Analysis

COST BENEFIT ASSESSMENT – PROPOSED LOCAL LAW AMENDMENT: SHORT STAY
LETTING & HOME HOSTED ACCOMMODATION

•     $75 per home hosted accommodation property and $75 per short stay let property four times and no more than
      60 days per year for Principal Place of Residence premises.

These fees will be fixed for the first three years of implementation, with indexation applied thereafter.

Approvals must be renewed annually while accommodation continues to be provided, although no fee will be levied
by Council on renewals. Ongoing management and administration of the proposed local law outside of application
fees will be funded via general rates.

The approval costs and higher general rates levied on short stay letting and home hosted accommodation are not
included in the cost benefit assessment as they are already included in the identified additional costs incurred by
Council which are then passed on to accommodation providers through the approval fees and higher general rates.
Council indicates that 86% of short stay letting premises are owned by persons residing outside of Noosa Shire
(35% rest of Queensland, 45% interstate and 6% international), meaning that only 14% of these costs will be
passed on to Noosa Shire residents.

Consideration of the potential impact of the increased costs incurred by accommodation providers on the ability to
continue to operate and attract visitation to the region is included in a subsequent section.


    IMPACT SUMMARY:

    No additional costs are incurred as these costs represent pass-through costs equal to the financial costs
    incurred by Council covered in Section 3.1, noting only 14% of the costs from Section 3.1 will be incurred by
    Noosa residents and only 49% of the costs from Section 3.1 will be incurred by Queensland residents.


3.2.2       Property Management Costs
It is estimated that around 3,700 premises will require approval under the local law, with 100 of these being home
hosted accommodation and 3,600 being short stay letting premises.

The proposed local law requires short stay letting properties to appoint a local contact person to the premises who
must be available 24 hours a day / 7 days a week and be located within 20 minutes travel by vehicle, in addition to
responding to complaints within 30 minutes. Letting agents, security firms or property owners themselves can be
the nominated contact person to respond to complaints. Home hosted accommodation will not incur any additional
property management costs as there is no requirement in the proposed local law for a contact person given that
the guest resides at the premises and is able to deal with issues on the spot.

Research indicates that property management fees for short stay accommodation equate to around 15%-20% of
rental revenue depending on the level of service included, with additional fees for linen, call outs, advertising, etc.
Many properties are currently managed by local agents and many property management arrangements already
include after-hours response mechanisms.

The additional costs to short stay letting property owners from adhering to the proposed local law are difficult to
estimate, as they will be dependent on the current property management structure of each premises. The least
cost impact will be on those premises managed locally with an after-hours service, while the greatest cost impact
will be on those premises managed from a distance with a lock box system and no after-hours service.

In the absence of information on property management structures applicable to all short stay letting premises, the
following assumptions are made:

•     50% of premises (1,800) have a 24/7 response currently included.

•     50% of premises (1,800) do not have a 24/7 response currently included.

It is assumed that the following additional property management costs will be incurred as a result of having a local
contact person to deal with complaints in accordance with the required timeframes:

•     $2,000 per annum additional annual retainer cost for premises without a 24/7 response currently included.

•     $500 per annum additional annual retainer cost for premises with a 24/7 response currently included.




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