Airbnb back to basics as global backlash bites

You may have noticed an increase in glossy TV ads of late, showing nice people moving in with even nicer people, usually somewhere exotic.  Then the Airbnb logo appears, launching its “Rooms” concept.

Has the global holiday letting agency had a sea change?  Has it belatedly found its community spirit and revived its caring and (genuine) sharing soul.

Or has the ubiquitous holiday rental platform, confronted by complaints about homelessness, rising rents and plummeting availability, been forced to change tack as politicians wise-up to the havoc wreaked on residential rentals by more lucrative short-term holiday lets (STHLs), demanding more restrictions on them.

Airbnb founder Brian Chesky, launching “Airbnb Home, says he regrets the direction the company took en route to building his US$80 billion global business.

Make that “re-launching”. This is nothing new, as writer Lee Tulloch pointed out in a recent article in the Sydney Morning Herald.  In fact, renting a room in your house or apartment to a traveller, rather than renting an empty home to strangers that the “host” need never meet, was the original concept for Airbnb.

The more cynical observer might think that Airbnb has simply maxxed out its whole-home potential and sees greater growth in its original, genuine sharing model, currently only a tiny part of its business?

The initial global Airbnb expansion saw hundreds of thousands of whole homes listed as short-term holiday lets (STHLs). This was often in defiance of planning laws but local authorities around the world lacked the resources to police their own regulations in the face of an unforeseen tsunami of illicit STHLs.

In tourism-dependent Australia, the state governments’ response was to neuter planning regulations in policies that could only be described as “come on down!”

Now, amid affordability and homelessness crises, awkward questions are being asked, and some of the answers are not to Airbnb’s liking.

As reported in the AFR last week, the city council in Hobart, Tasmania, has doubled the rates on holiday let properties in an effort to drive investors back to the residential rental market.  Brisbane City Council has raised its surcharge on holiday lets for the same reason.

Airbnb has cried foul and says it would rather pay a single fee to state governments. Of course, it would.  It was state governments that encouraged the spread of holiday lets in the first place and it’s in local areas that resistance is growing.

In Byron Bay, that all-tourist town where service providers can’t afford to live, the council is attempting to impose a 60-night limit on holiday lets.

In Queensland, Noosa requires STHL hosts to register and post the number of a 24-hour hotline on their front doors in case of antisocial behaviour by guests.

Victoria’s super-weak STHL laws have led to serious problems in Melbourne apartment blocks and seen upmarket developers include “no-Airbnb” clauses in their sales contracts.

A recent Municipal Associations of Victoria conference voted 80 per cent in favour of a motion asking the state government to introduce restrictions on STHL, including a 60-night cap.

NSW’s holiday letting laws limit STHLs to 180 nights a year and allow owners corporations to ban apartment lets, but only in Greater Sydney and only in investment properties, not principal places of residence.

The new Labor government will eventually have to rule on Byron Bay’s proposed 60-night cap, knowing there are other local councils queuing up to acquire the same powers.

Meanwhile, Australia is not alone in giving powers back to local authorities. From next year holiday lets in Scotland will need to be licensed, at uncapped fees set by local councils, while in England STHLs will soon require planning permission.

As for Aussie investors, perhaps a rates hike on holiday lets might take properties on the fringes of the hot spots off the holiday market, as the income gap between STHLs and residential rentals narrows.

And your long-term tenants might get some relief from the constant churn of strangers and party animals in neighbouring flats.

A version of this column first appeared in the Australian Financial Review.