The Byron Shire Council is again seeking to regulate the holiday home rental listings market.
The NSW north coast municipality has taken a property owner to the Land & Environment Court seeking to stop them from leasing the property to tourists.
The February 2013 test case could affect the whole NSW holiday letting industry.
Byron Shire Council is taking Joe Blaney who owns an Ewingsdale property to court to prevent its lease to short-term holidaymakers.
Its on an 8000 square metre Bayvista Lane, Ewingsdale property which cost $1.25 million in 2007.
The council said the owner was operating a tourist facility without a development consent.
It wants the court to decide whether holiday lettings are covered by the definition of a “tourist facility”, and are a business or commercial operation prohibited in residential areas.
Its a class 4 prosecution for alleged illegal use of premises for holiday letting.
Local estate agents said it would not only severely affect property values, but would ripple through local economies.
The president of the Holiday Letting Organisation Byron Bay which represents around 600 home owners, John Gudgeon, said it would affect every town on the coast.
It was an issue that initially flared in 2009 arising after complaints about disturbances by home owners within neighbourhoods.
Agents suggest some 70 of owners seek income from short term tourists around the Byron township.
Three sales had recently fallen over because prospective buyers could not get assurance from the council they would be permitted to lease their purchases, according to Ray White agent David Gordon.
“People don’t appreciate how widespread the damage could be," David Gordon said.
"There’s a whole economy behind just one holiday rental – cleaners, restaurants, home owners,” David Gordon told the Australian Financial Review.
“Generally it is families leasing them, they’re the ones who spend more money and stay longer.”