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Keeping chooks in your backyard is legal. In NSW the legislation that covers the keeping of Poultry is in the Local Government Regulations (see below) and is administered by your local council.
When I started Rentachook I wrote to all 52 councils in the Sydney Metropolitan area asking if there was any prohibition on the keeping of chooks or whether there was likely to be any problem with the portable coop I was intending to sell. Not one replied to say that it was a no go, not even the Sydney City Council!
Most Councils stated that the Environmental Health Officers (EHO's) only investigated the keeping of chooks if Council received a complaint from a neighbour. When they investigate they are looking to see if the birds are kept in a suitable coop, and are kept free of 'odour and vermin'. In 12 years of running Rentachook, I've never had a coop returned because of an order from the local Council.
Here's what an EHO from Warringah Council told me regarding the keeping of chooks in Warringah:
It's legal, give it a go!
For those who want to read the NSW law for themselves, see below. The important thing to note is that clause 19 applies for keeping poultry, meaning that the chooks need to be kept clean, odour free and not creating a nuisance. Clause 20 only applies if Council serves you with an order (see subclause (5)). However, most council officers use Clause 20 as a guide when advising on the rules for keeping chooks.
Here it is (correct as at Feb 2010):
(1) Poultry must not be kept under such conditions as to create a nuisance or to be dangerous or injurious to health.
(2) Poultry yards must at all times be kept clean and free from offensive odours.
(1) Fowls (that is, birds of the species Gallus gallus) or guinea fowls must not be kept within 4.5 metres (or such greater distance as the council may determine in a particular case) of a dwelling, public hall, school or premises used for the manufacture, preparation, sale or storage of food.
(a) that are not within 15.2 metres of a dwelling, public hall or school, or
(b) that are situated on clean sand.
(5) The standards in this clause apply to a person only if the council has served an order under section 124 of the Act to that effect on the person.
Here's the letter I sent to the councils in Sydney.