Blue Mountains Getaways owner Geoffrey Bott said six months into new NSW Government planning regulations over holiday lets, the problem has become "horrendous" to manage.
The new state-wide regulatory framework for short-term rentals took effect in November 1, last year. It means unhosted holiday letting sites are capped at 180 days. But Mr Bott said the Department of Planning law systems do not take into account any days that owners stay in the properties, for example.
"The whole thing has been poorly thought out," he said. "The system is not designed to cope with restriction."
"It does not take into account the owners' use of the property with guest use. I've been in contact with the Department of Planning over this issue. They simply cannot differentiate, there is no facility [for a special owners code]. They indicated that this would be fixed in March, but nothing has resulted yet."
Mr Bott said evidently the government checks sites like Air B'n'B and Bookings.com to monitor bookings.
"If you have been renting your property out for say 220 nights and you have been doing this for years, it is an unreasonable and unfair restriction of trade to cut it back to 180 nights."
He currently has 55 properties under management and estimates and believes he is the largest letting agency in the Mountains, where about 500 holiday homes exist.
He said it could lead to a shortage and impact tourism and he said many people managing their own holiday lets "don't realise this situation is coming about".
"We have the authority to change our rates for peak times. But there would be a lot of people out there who self manage their properties, who are going to find the rug has been pulled out from under them at the busiest time of year when they run out of permitted night's use."
"You will get advice from the Department of Planning and will have to manually close down all available dates in your system - and that's providing they are all synchronised. If you are doing this all manually it's a complete pain."
Mr Bott acknowledged the law has come in because of poor behaviour by some Air BnB sub lets in flats that "upset the people living there".
"That's how originally it got a lot of traction, but certainly the hotel lobby has been key to try and reduce the impact holiday lets have on their business."
His business is about to hit the peak period of winter and he will need to raise prices for holiday makers to lower demand for some properties so they don't exceed the 180 day rule. Mr Bott said a group of Byron Bay holiday let owners have mounted a court case protesting the limit.
A spokesperson for the Department of Planning and Environment said: "Our Short-Term Rental Accommodation policy provides consistency to a previously unregulated industry, and balances the positive economic impacts of holiday homes with the need to support local housing markets, and improves housing availability and affordability.
"It also improves safety for guests, while reducing impacts on neighbours, and provides better data to help us understand the size and location of the industry, to support future housing supply decisions and any adjustments to the policy."
A policy review will take place within two years.
NSW became the first state to regulate Airbnb-style lets in 2018, when it passed planning laws mandating a a 180 day-cap for investment properties in greater Sydney, including the Blue Mountains. Previously, it was up to each council to set their own rules on short-term lets.
Sign up for our newsletter to stay up to date.