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


EXECUTIVE SUMMARY
Noosa Shire Council (Council) is proposing a local law to manage the operation of short stay letting and home
hosted accommodation across Noosa Shire to better manage the adverse effects on predominantly permanently
occupied residential communities from the increased utilisation of residential properties for short stay
accommodation.

A cost benefit analysis has been undertaken to demonstrate the benefits and costs – and the overall net benefit or
cost – to the community from the proposed local law using available information and market assumptions where
information is not publicly available.

It is presently estimated that there are nearly 5,000 properties operating short stay letting or home hosted
accommodation. Some of these properties are located in designated short stay accommodation precincts and
locations and as such will not be subject to the local law.

The costs of the proposed local law (in real terms) are estimated as:

•   Council administration costs of $0.68 million in 2022, $0.70 million in 2023, $0.46 million in 2024 and $0.31
    million thereafter, passed through to short stay accommodation property owners via initial application fees and
    ongoing general rates.

•   Additional property management and complaints administration costs for short stay let premises (not home
    hosted accommodation) of $6.12 million per annum, with $0.25 million incurred within Noosa Shire, $0.63
    million incurred elsewhere in Queensland and $5.24 million incurred interstate or overseas.

There is a significant impact on traditional residential neighbourhoods from the increased level and type of activity
associated with short stay accommodation, much of which is focussed on noise disturbances, amenity, safety and
security. Placing effective local controls on activity and behaviour will reduce the extent and type of adverse effects
on permanent residents in locations where short stay letting and home hosted accommodation are provided.

Much of these impacts relate to resident health and residential amenity, with amenity referring to the ability for
residents to enjoy their homes in a peaceful manner with feelings of community and safety. Residential homes
should allow their occupants the ability to wind down, relax and sleep with minimal disturbances. Such residential
amenity maximises resident health and wellbeing.

Potential beneficiaries within Noosa Shire from the proposed local law include 10,610 residential properties
consisting of an estimated 26,525 persons, and as such represent a significant portion of the local community. The
benefits of the proposed local law on resident health and residential amenity are estimated as $9.56 million per
annum.

It is not anticipated that the supply of, nor the demand for, short stay accommodation in Noosa Shire will be
impacted by the proposed local law based on assessed financial impacts on property owners and the potential
impact of passing through increased costs to visitors.

A quantitative assessment has been undertaken, with costs and benefits discounted to present value terms to
estimate the net present value and benefit cost ratio of the proposed local law over a 30-year period. Sensitivity
analysis has been conducted at real discount rates at 0%, 4%, 7% and 10%.

When considering all impacts irrespective of location, the value of identified benefits exceeds the value of identified
costs.




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