Councils in tourism hot spots around the state will be watching with interest as the Byron Shire Council pushes ahead with plans for a 60-day annual cap on short-term holiday letting.

The cap was a key recommendation from the state's Independent Planning Commission, which held two public hearings on the issue earlier this year.

NSW Planning Minister Paul Scully told the ABC the onus was now on the council to demonstrate it could implement the regulations.

Mayor Michael Lyon says he is determined to see that done.

"We've actually got a QC [a King's Counsel barrister] and an expert planner on this to ensure that we actually get something workable," he said.

"We're going to write these regulations on exactly how to put this in place to give the Department of Planning what they need in order for us to get what we need.

Holiday letting halved?

People with holiday-let properties can apply for an exemption from the cap.

Cr Lyon says the council must determine how many exemptions can be granted.

"We're currently sitting at something like 9 per cent of all dwellings in the shire are unhosted holiday lets," he said.

"If you were to halve that, you would still be higher than anywhere else in Australia.

"So somewhere in that range, you've got to start looking; that's the starting point."

Those figures have been disputed by the industry, which has campaigned against the proposed cap.

The holiday rental sector is a vital part of the region's $1-billion tourism industry, according to chief executive of A Perfect Stay, Colin Hussey.

He says there are approximately 20,000 dwellings across the shire, with 950 used as full-time holiday rentals.

"They make up about $440 million of that $1 billion," Mr Hussey said.

However, he concedes there could be room for a compromise.

"What we do want to do is address affordable housing — so restrict the number of full-time [holiday rental] homes down, but let them do it 365 [days a year]," he said. 

Common council issue

On the state's south coast, Shoalhaven Mayor Amanda Findley last year wrote to the owners of local holiday rental properties and asked them to consider a switch to long-term renting.

The council has a sweeping, 365-day policy for holiday rentals because it has been unable to find a flexible alternative that factors in the popularity of different areas of the LGA.

"At the moment, we are sort of powerless," Cr Findley said.

"We can only take on a blanket [policy] in the number of days, so we've got no nuance in that.

"Because the guidelines from the state government don't allow us to intervene in that in any meaningful way that is nuanced for each of our suburbs."

Cr Findley is pleased to see the Byron Shire Council taking on the issue.

"They've been going really hard on this for a long time," she said.

"They've opened people's eyes to this issue and given people like me the opportunity to get on that platform with them and say, 'Look, we've got a problem too.'"

Cr Findley would like to see local governments given a range of options to address holiday rentals, including annual caps, additional property taxes or a levy for owners.

"Absolutely we see caps as part of the solution, but we see caps as being in planning-zoned areas," she said.

"We would like to see things like levies or higher rates to go to those properties to see that they're treated like businesses and not as residential homes."

A year from now

Byron Shire Council hopes to have the 60-day cap in place by June next year.

For Councillor Sama Balson, the change can't come quickly enough after being forced to move 24 times since last year's floods.

"You'd have to shuffle out of the rental when there was a pre-existing booking," she said.

"I had to move myself and my family out of a lovely little place that we managed to have for probably one of the longest times in that period because of Schoolies Week."

Cr Balson described the 60-day cap as "an essential step forward" for freeing up housing stock.

"We already have lost so much stock … granny flats are no longer for grannies. A pensioner can't afford holiday-rental prices," she said.

"The 60-day cap will absolutely help to bring the stock of the existing houses back into the rental market.