Byron Shire Council and the Department of Planning are at loggerheads about the area's holiday letting, with the council determined to control its "party central" reputation.

The council is seeking amendments to its local environment plan (LEP) with one of its key objectives being to ensure that properties in residential zones aren't used as holiday houses, instead limiting tourists and holiday accommodation to certain precincts.

"From a local government perspective, we are trying to look after the rights of residents who bought their property in a residential zone," said Byron Shire Council mayor, Jan Barham. "People pay big money to live in Byron and feel that they are going to be a part of the community, and then they find out that it's party central next door."

The Department of Planning believes that the council's proposed amendments are too restrictive on what people can do with their property, and have asked to council to make modifications before the LEP can be approved.

In a letter leaked to the Australian Financial Review, the department's deputy director-general, Tom Gellibrand, said "While no final decision has been made, I expect the conclusion will be that this it is not appropriate to control holiday tenancies through the planning system. Accordingly, I cannot agree with the current draft provisions within the draft LEP."

The Council and the department have been "tooing-and-froing" on this issue since 2004 and mayor Barham is becoming increasingly frustrated with the department’s stance.

“They’re getting heavily lobbied. They are very much pro-development and very much lacking in their understanding of regional and rural issues … They don’t think that we have the right to self-determine and they’re changing the character and the face of small communities all around the state in favour of supporting developers,” she said.

According to Barham, just over a fifth of the houses in Byron Bay, in the past five years, have been used for holiday let and this has pushed house prices up by about one-third. The number of residences available for permanent residential renting has also dropped.

"The most interesting example is that we saw the highschool population drop by about 150 students, which led to the loss of five teachers in the school ... People had to move because they couldn't find anywhere to live or they couldn't afford to live there," she said.

A council meeting is due to be held in Byron on either 24 September or 8 October, allowing the council to address the issues raised in the department's letter and to better explain their position to their department.