Airbnb tackles backlash among
residential neighbours
The Australian
Samantha Hutchinson
17 December 2016
Chris Lehane had his work cut out for him. The strategic Mr Fix-It for
accommodation giant Airbnb arrived in Sydney this week in the middle of
a heatwave and at the start of a holiday season in which tempers are
expected to flare between residents and tourists using the
accommodation platform.
But the head of global policy for Airbnb came prepared. Lehane had
recently unveiled a gentler, more collaborative approach to working
with city officials in New York, London, Amsterdam and New Orleans. In
Sydney, too, his tone was similarly co-operative.
what sort of light-touch regulatory
frameworks
“It’s pretty straight forward,” he told a collection of media and
policymakers assembled around the table in Airbnb’s inner-Sydney
office. “Allow people to use their primary home however they want to
use it and then figure out what sort of light-touch regulatory
frameworks ... you want around how you want to deal with the secondary
homes.”
Lehane was addressing the claim that Airbnb is now big business. Far
from its humble beginning as the occasional room in an established
home, the platform is now commonly used by commercial landlords
operating strings of properties. While the former Bill Clinton aide is
cognisant of the challenges for city planners, he believes homeowners
should be free to do as they please with their primary residences,
while property investments and secondary properties should be more
closely regulated.
He also spoke in support of the right of councils to cap the number of
nights a year an entire home or apartment could be rented out, and
Airbnb’s new willingness to share data with authorities.
But when it came to the more contentious claims that Airbnb and other
short-term rental providers were disturbing neighbourhoods, pushing
traditional renters out of the city and lifting property prices, he was
more equivocal. “Part of that is up to the government to balance,” he
said. “How much is it benefiting from a tourist economy versus making
sure you’re not impacting long-term house markets?”
had also come to put out the fires
If Lehane had come to blow the company’s trumpet, it soon became clear
he had also come to put out the fires among residents reacting to an
expanding passing parade of tourists flocking to homes in the suburbs
for their holidays.
Sydney resident Michael Heaney knows the feeling all too well. The
violinist lives with his wife and young son in a penthouse at the top
of Sydney’s Maestri Towers. He has faced dwindling security in the
building, queues for the lift, overcrowded foyers and carparks and
excessive noise as neighbour after neighbour in the up-market tower put
their apartments up for short-term rentals.
204 of the 384 apartments were in play
In the end, up to 204 of the 384 apartments were in play. “I wanted to
live in an inner-city apartment, not a hotel,” Heaney says. “But this
new state of affairs means the one thing can be both.”
This experience is becoming increasingly common as the digital
revolution in short-term accommodation reverberates around the world.
Online rental platforms are converting established houses and
apartments into marketable commodities for owners, in some cases
delivering serious incomes.
Welcome to the new world of the shared economy. Allowed to flourish
under relatively benign policy settings, Airbnb has amassed 87,000
listings across Australia and more than 3.5 million users since its
launch here in 2008. Local competitor Stayz.com.au, a division of
Fairfax Media, rents out entire homes and has more than 40,000
listings, including beachfront homes charging thousands of dollars a
night. Meanwhile, upstarts including HomeAway and FlipKey are making
significant inroads.
the pay-off can be
substantial
For property owners prepared to get on board, the pay-off can be
substantial. Bondi resident Vanessa Vartto and husband Jason can net
almost $5,500 a week letting out their three-bedrom oceanfront
apartment
on Airbnb, which is enough for the young couple to cover mortgage
repayments, rental on their Paddington home and then some.
Melbourne couple Laura Walters and husband Alex are also using the
platform to shore up financial security. With a young son and another
one on the way, they have shaved 10 per cent off their mortgage during
the past two years by decamping every month to in-laws so they can rent
out their South Melbourne apartment. They tipped the proceeds into
renovating the apartment and used the uplift in value as equity to buy
a second home in Geelong.
The Geelong move means they will now be able to net about $60,000 a
year in income through Airbnb, paying off their 30-year mortgage in
half the time.
“We originally saw it as a way to make a bit of extra cash to do bits
and pieces around the home, but it’s become a lot more than that,”
investment manager Walters tells Inquirer. “If you’re prepared to
approach it like a business, it becomes this revenue stream that makes
a huge difference.”
residents at Maestri Towers were
subsidising short-term rentals to the tune of about $170,000 a year
But just as advocates wax lyrical about the convenient new income
stream unlocking value in their homes, critics and disgruntled
neighbours are mobilising against the practice. Quality of life is not
their only complaint. Their strata levies are also suffering. Heaney
calculates that at its peak, residents at Maestri Towers were
subsidising short-term rentals to the tune of about $170,000 a year.
His penthouse strata fees peaked at $22,000 a year in 2010 before he
and a dozen residents wrested control of the body corporate, changed
the strata rules to prohibit short-term rentals and dumped the building
managers. Today, strata fees are 15% lower than that 2010
figure, against an industry average that has risen 15% in the
same amount of time.
“You can make all these rules to make sure guests don’t make noise so
that they don’t disturb other residents, but they’re still wearing down
the building every time they drag their suitcase across the foyer or
use the lifts,” Heaney tells Inquirer.
Heavy traffic throughout the building from such short-term rentals
shaved 25% off the life expectancy of the tower’s lifts, and
also forced residents to replace 20 floors of foyer tiling when the
practice was stamped out.
the safety
implications
The data hasn’t been tested across the industry, but Heaney’s
calculations have found support throughout other resident networks fed
up with short-term rentals, including the Owners Corporation Network,
which represents strata owners Australia-wide. The group is calling
for tenancies of fewer than three months to be stamped out in
residential buildings, while also raising awareness of the safety
implications associated with short-term rentals.
“Hotels are equipped with maps, sirens and extra exit signs to assist
strangers to escape the building safely in the event of an emergency
... What will happen when you have a high-rise building with 1,000
extra
occupants who don’t know the building, trying to escape a raging fire?”
chief executive Karen Stiles says.
The impact of their calls is forcing policymakers over the wall to give
the issue another look.
New York in 2010 outlawed renting out entire homes or apartments for
stays of less than 30 days, and tightened the rules in June by
levelling fines of $US7,500 for breaches of these rules.
Berlin established an international high-water mark in May when it
outlawed short-term rentals of entire apartments in a move to curb
ballooning rents and concerns short-term rentals were sucking stock out
of the market for renters, and driving house prices higher.
It is now illegal in Berlin for residents to let out more than 50%
of their flat on a short-term basis without a permit. Rents rose
56% in Berlin between 2009 and 2014.
Against the tide of international concern, Airbnb kicked off an
about-turn in June when it announced it would work with New York City
officials and share data to boost enforcement.
It followed last week’s announcement Airbnb would take responsibility
for the enforcement of caps in London and Amsterdam, limiting the
number of nights entire homes can be let out each year to 90 days in
London and 60 days in Amsterdam.
The move coincided with an agreement struck with New Orleans city
officials in which it committed to sharing host data with the city, and
agreed that its hosts must operate with a permit. The company also
agreed to ban almost all listings in the city’s historic French Quarter
and set a 90-day annual cap for hosts who rent out entire homes.
“Airbnb recognised that it would have to change the way they were
interacting with cities and change the way things were going for them
across the country,” Ryan Berni, a New Orleans deputy mayor who
negotiated the regulations with Airbnb, told The New York Times.
And as the platform’s annual high season approaches in Australia, all
eyes are on the company to see if it adopts the same conciliatory
approach over here.
To be fair, there is a lot at stake. As of this month, more than 3.5
million Australians had an Airbnb account; according to the company,
that is a 200% rise on this time last year. Sydney now sits
firmly within the top-five users of the platform worldwide and
Melbourne is quickly advancing up the ranks into its top 15 worldwide.
Already a slew of rulings has tipped the scales in favour of the
short-term rental market. A Victorian Civil Administration Tribunal
ruled that tenants renting out their entire home on Airbnb were not
subletting and were not in breach of their rental contract.
Another Victorian ruling in July, in the Supreme Court, found owners
corporations such as body corporates could not make rules to ban
short-stay operators.
But voices such as Heaney’s are growing louder, as are those of
well-co-ordinated lobbies including the hotels industry, which argue
that the boom in short-term rentals is putting Australia’s hotel room
sector and investment prospects at risk.
Regulation is under the microscope in NSW, where the state’s Planning
Minister Rob Stokes is midway through a six-month review of the rules
governing short-term letting.
The review follows on from a government committee on the issue that
attracted 212 submissions; more than a quarter came from residents
wearied by the impacts of short-term letting near their homes.
Stokes isn’t prepared to comment on which way legislation will go, but
tells Inquirer the incidence of party houses is a primary concern he
intends to address early next year.
Minister for Better Regulation Victor Dominello, who is partially
responsible for the reform process, has indicated regulation could be
strengthened. “This issue has generated a range of competing interests
and our job is to navigate an outcome,” he says.
serious missteps have been made in the reform
program
Already, the hotels industry says serious missteps have been made in
the reform program.
“The inquiry recommendations are based on some fundamental mistakes,”
Tourism Accommodation Australia chief executive Carol Giuseppi says.
“These operators hide behind the ‘sharing’ notion to disguise what is
quite plainly a $US30 billion enterprise that increasingly provides a
platform for commercial property investors.
“What started out as air mattresses in a lounge room has morphed into a
massive and disruptive commercial business that is stripping cities of
housing stock for long-term renters.”
More tellingly, a submission from NSW Premier Mike Baird and his
cabinet to the inquiry made no mention of the impact of the practice on
rental availability or affordability. Critics of short-term rentals
argue its real threat is far more sinister than party houses causing
residents to lose sleep or vague insurance guidelines that leave strata
bodies liable.
A report compiled by the City and County of San Francisco’s office of
the controller found that although short-term rental platforms had
boosted the city’s hotel tax revenue and visitor spending, the practice
also had the potential to take conventional rental stock out of the
market for good. Why lease to long-term tenants when you can make
exponentially more with short-term rentals?
Economists have calculated that for every apartment taken out of the
market for full-time short-term rental, the city would lose $US250,000
to $US300,000 ($340,000-$400,000) a year, exceeding the annual total
economic benefit from visitor spending, host income and hotel tax.
a new class of professional landlords
At its worst, there is evidence that short-term rental platforms are
spawning a new class of professional landlords who are squeezing
genuine permanent renters out of the inner city.
A 2014 report by the New York Attorney-General found one Airbnb host in
Manhattan was making more than $US6.8m a year on 272 listings. The
report also estimated the city was owed about $US33m in unpaid hotel
taxes from undeclared short-term rentals.
Australian economist Saul Eslake believes our cities could suffer the
same effects. Rental stock hasn’t increased at the same pace as demand,
he says, so every apartment taken out of the rental market for
full-time short-term letting is likely to contribute to a rental
squeeze.
Affordability issues in Sydney and Melbourne mean more home buyers are
renting for longer. If more landlords buy investment properties
specifically for short-term tenants, existing tenants will face higher
prices.
“I have no evidence in either way, but I believe the possibility of
renting out houses and apartments via something like Airbnb may be
encouraging some people to think about property investment in a
different way from how they did in the past, and it could be increasing
demand for housing as an investment,” Eslake tells Inquirer.
“And landlords buying apartments to rent out to tourists is no doubt
adding to the pressure that renters face; it’s an exacerbating factor
in terms of affordability — but precisely by how much, I have no idea.
It’s something that someone needs to seriously look at.”
A glance at listings in Sydney’s Bondi Beach reveals an average nightly
rate of $333 for a private home or apartment with two bedrooms or a
weekly rate of $2,333. This compares to an average across the suburb of
$1,000 a week.
The same startling disparity is evident across other popular
destinations. Two-bedroom apartments in St Kilda average $217 a night
on the platform or $1,519 a week, compared with a weekly average on the
rental market of $515.
But a six-month total reveals the serious inroads short-term rental
could make on a mortgage compared with conventional tenants. In Bondi,
an apartment let every day for six months with Airbnb would generate
$60,824, compared with $26,071. In St Kilda, the difference blows out
to three times as much, with an Airbnb rental generating $39,602
compared with $13,426 on the average rental.
Full occupancy every day for six months may not be realistic, but
three-quarter occupancy still puts homeowners using Airbnb
substantially ahead.
Airbnb’s Lehane is aware of concerns that the premiums available on the
platform could compel landlords to make a permanent switch to
short-term rentals, leaving genuine residents priced out of the inner
city. He says the concerns have prompted other jurisdictions to act
decisively.
“What they’re trying to optimise for is people who are engaged in
commercial activity not taking long-term housing to short term … And
that’s what I would just do in a place like Bondi,” he said.
Comments
Wayne
If a Lot in a strata scheme is permitted to be used for residential
purposes then there should be no restriction on the type or duration of
the residential use ..... even short term residential use.
Lisle
@Wayne You should look up your Council's Local Environment Plan (LEP)
and read all the definitions.
There are residential, industrial, light industrial, tourist, retail,
etc.
Residential means precisely that - when you are paying for
accommodation it becomes commercial.
Then being commercial it must reach the same standards of Approved
Holiday Apartment blocks, hotels and motels which must meet certain
standards to be approved by local councils in order to have DA
consent. For instance, there must be a manager on site
24/7. It must meet additional fire, health & safety
regulations including parking and accommodation for those with
disabilities.
It is normal in a residential block of apartments that the majority of
occupants go off to work or school/university each day or night.
Now that becomes a problem when there are some holiday apartments
partying all night.
The minimum stay has been deemed to be 90 days.
I used to get sick of knocks on my door asking how to use the air
conditioner, where is the janitor, how do I get into the city, where's
the best hairdresser? It just went on and on, not once but
everyone who arrived. You see there was no manager on site.
Wayne
The argument that Airbnb clients increase the usage of lifts,
recreation facilities etc in the strata buildings is an absolute
nonsense.
The residents who are complaining about crowded lifts etc are probably
living in buildings where, prior to the advent of the sharing
economy, less than half the building had full time residents i.e.
these whining residents have lived in a half occupied building.
These same whingers have had the benefit of other lot owners paying
their levies for services which they do not use as they do not reside
there.
However, have these same whingers stopped to consider what would happen
if every single non resident owner lived in these apartments? Surprise
surprise ... the lifts would be more full,the building would be
noisier, the foyer would be more crowded, the pool would be more
crowded, the carpets in the common property would be more worn! That's
what happens when a building is fully occupied!
If a non resident lot owner wants to rent out their apartment via
Airbnb then they should be permitted to do so.
There are by-laws in place in every strata scheme which cover issues
such as noise and nuisance, damage to common property etc.
Lot Owners who have had all of the benefits from living in a half
occupied building need to realise that they cannot have it their own
way all of the time. They must be REASONABLE!
Peter
Whining NIMBYs. Hotel lobbies. Vastly exaggerated claims. What
decently-run body corp does not have security, signs in place? If not
replace the committee. 25% extra wear-and-tear. This is just
ridiculous. In fact short-term renters who are out sight-seeing may
well reduce wear. Party noise? We'll have you never heard of noisy
neighbors in standard property settings? If you have them, call the
police. Higher body corp fees? Replace the committee and institute
proper financial management instead of whipping up imaginary causes.
Contemporary economies are moving to work and income based on household
capital. The old economy of offices and hotels doesn't like this. Well
tough. It is clear where the future economy is going and property
owners are entitled to participate fully in the new economy rather than
go down with the old economy.
Lisle
@Peter What a pity there are council planning regulations which have to
be met which rather spoil your story.
With luggage cases being carted and dragged over the carpet on a daily
basis, that was an enormous big item wear and tear on the carpet.
From my experience there is triple the amount of rubbish in service
rooms, because the refrigerator is being cleaned out daily.
Above all when I was on the Manly Council Working Party on Holiday
Letting in 2004, within half an hour of the first meeting commencing,
it was quite clear it was illegal in our apartment block under council
regulations without obtaining a Development Consent.
Incidentally, our apartment block is completely occupied with owners
and tenants - a one bedroom apartment recently sold for $1,265,000.
Peter
Short-term tenants eat more than long-term tenants? Short-term tenants
move more heavy-duty goods in and out of apartments than owners do? I
am an owner in an apartment block with AirBnB short-stayers. None of
these things happen. The short-stayers on the other hand add to the
vibrancy of the neighborhood and the building, and to the local
municipal small-business economy which is thriving which makes my
locality even nicer than it already is. NIMBY and Council carrying-on
threatens the nascent new economy as it develops. Look around at how
the old economy is limping along. Regulation and hysteria will kill the
new economy and the collective damage will be felt in neighborhoods
that otherwise could boom.
Chris
Sydney has now lost 23,165 homes to Airbnb. It's just one
short-term letting website.
CBD: 5,527 homes for rent this week on Airbnb, 1,529 homes
available on Domain.com.au.
Waverley Council: 4,087 homes for rent on Airbnb and just 350
homes for rent this week on Domain.
Byroy Shire: 1,483 homes for rent on Airbnb and just 36 homes
available through Domain.
Residential Housing is for the housing of RESIDENTS - just ask our NSW
Land and Environment Court of their judgements on mixing the two uses -
it's "fundamentally incompatible". Think of the tenant
evictions, the displacement of essential workers, the upward pressure
on rents in suburbs close to employment. Our NSW Parliament wants
to make this 'complying development' state wide? Please! See
www.neighboursnotstrangers.com and sign their petition to
parliament:
https://www.communityrun.org/petitions/stop-short-term-lets-neighbours-not-strangers-2
Peter
AirBnB properties are rented mainly in the outer ring of the inner
city. It does not compete in the larger rental market. In that larger
market the number of rental properties available is a function of the
number of properties being built which is determined by local
government regulations and approval processes. If you want more rental
properties across the totality of the city then you have to cut
meddlesome regulations.
Peter
X thousand advertised for high-churn short stays is the equivalent of Y
hundreds advertised for 3 year renewable long-term rental contracts.
Let's not confuse chalk and cheese.
Lisle
In October 2000 we moved into our brand new apartment in a block of 162
nearby to the great Manly ocean beach.
Come January, we started asking the question "who are all these people"
using our homes as a holiday resort?
I then commenced a study of who these holiday makers were, and
discovered organized by five holiday agents, they had taken over our
brand new complex.
What's wrong with that you may ask? The problems are enormous.
Imagine our foyer on a Saturday morning, loaded with suitcases of
holiday makers leaving and holiday makers arriving. We have a
photo of my husband, an EDA Veteran with sight problems trying to
manouvre himself through a foyer which looked more like an airport.
These were early days for the internet, but I quickly discovered that
there were hundreds of entries for our apartments.
Fortunately we became aware of a Land & Environment Court case
which stated that you needed a Development Consent from local council.
On the election of a new Manly Mayor, Dr Peter Macdonald, he called for
a Working Party to established into short term and holiday letting of
which I became a member.
This report in November 2004 confirmed that it was illegal, and that a
minimum tenancy of three months was required. As the day
progresses I will comment further on this.
We quickly passed a new by-law which was savagely campaigned against by
the holiday agents.
Then in May 2012, a NSW Liberal Minister Hazzard communication was
tabled at a Manly council meeting. This rang alarm bells, so I
gave a public address at council.
Airbnb may be a smart business concept, but it must not be permitted in
residential apartment blocks, unless the building has the necessary
Development Consent.
As the Premier Mike Baird is our local member, he has no idea what he
has unleashed.
Debra L
@Lisle We had the same experience but in a quiet residential
suburb in Airlie Beach. One day a large group of people descended on
the house behind us and made their presence well and truly felt with
childrens' screaming and shouting, crying and tantrums around the pool,
in the back yard and on their back deck.
The noise carried across our pool and onto our deck and living area.
All we could do was shut ourselves in or put up with, as I describe it,
living between a child care centre and the public pool on school
holidays. The parents were just as noisy, and if we were really lucky
they would party on the deck at night and take midnight swims.
The council now requires a development application but it is too late
for us. I have fought for a year with the council, the real estate,
community residents associations but they have the law on their side.
The owners are in hiding and their greed is all consuming.
I have now decided that if they want to holiday in a residential suburb
(while there are hundreds of properties in tourism zones), I am going
to give them residential noise and it's all legal.
Bring on the whipper snipper, mower, and every power tool I can lay my
hands on. We are renovating...
Les
The problem I see here is that it is not the fact that people rent out
their home or units. It's the people who use the place as a party house
and don't have any consideration for others. You know the age group
that I mean.
Neville
The same old protectionist arguments from established players looking
to stifle competition. Other than light touch rules on safety why
should this be any different to a hotel. Yes it undercuts the hotel
industry but to bring arguments about driving up rents and costs is a
red herring. How people use thier property should be far less of the
governments business
Debra L
@Neville. A noble attitude until the party house from hell moves in
next door.
Tanya
For the same reason hotels are not allowed in residential
neighbourhoods. We having zoning laws for a reason. People can't use
their property to run a business unless it's zoned for mixed use and
they have the appropriate permits. This should be no different.
Wayne
@Debra L The house from hell could easily be a permanent tenant with a
12 month lease. At least a noisy short term tenant is just that ....
short term!
Peter
Same old economy-crushing protectionism. All zoning does is drive up
housing costs by establishing elaborate local government procedures
that add mightly to housing costs to satisfy a vocal minority of
unhappy whiny complaining people with an overly sensitive dislike of
mixed uses.
Adrian
@Peter Good call Peter. There's absolutely no reason why a
slaughterhouse, a crematorium or a chemicals warehouse shouldn't be
right next door to an apartment block.
Peter
@Wayne @Debra L That's a non-argument
Debra L
@Wayne. The odds of a holiday rental disturbing the peace are much
higher than a long term rental with people going of to work school etc
every other day. We are surrounded by 10 children whose parents work
and the neighbourhood is peaceful except for 1/2 hour of daily play.
The holiday rental is occupied 7 days a week and it is not unusual for
them to spend all day around the pool shouting and screaming. Working
families don't have this luxury, even on weekends when they have sport,
visiting etc.
And short term means one leaves and another arrives a few days later.
So far, 80% have been noisy and obnoxious with a sense of entitlement
to have fun regardless of the locals.
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