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Airbnb and the battle for your block: Last week Jimmy Thomson looked at how some politicians have been seduced by the myth that online short-stay letting agencies bring nothing but good to the community. This week he examines the biggest player of them all, Airbnb, and how the spin from the $50 billion corporation is often a mixture of selective fact and dubious statistics backed by aggressive political campaigns and law suits.
People love Airbnb. Even those who would fight tooth and nail to keep it out of their own apartment blocks secretly rhapsodise the fabulous pad they rented for two weeks in the centre of Paris. Nimby? You bet!
I have used it myself and will probably do so again because it can be all the things the shiny website promises and still be perfectly legal and acceptable, even if Murray Cox of InsideAirbnb.com says one tourist’s holiday in a New York loft may be a local’s homelessness or at best, move to a less attractive suburb or a more expensive rental.
However, as NSW and Victoria MPs consider laws that would, say pessimists, hand over the keys to our high-rise kingdoms to holiday letting hosts, the rest of the world seems to be pressing the brake, rather than the accelerator.
Previously:
Part 1 – Holiday lets … opportunity or threat?
Part 2 – Free money and castles in the air
Part 3 – Politics and the myth of the vomiting bridesmaid
Not that you would get that impression from Airbnb’s marketing and publicity people here in Australia, where the message is that they are loved by 80 percent of ordinary people in Sydney, they are helping ordinary people make ends meet, and they aren’t forcing ordinary people to pay higher rents or move out of popular areas.
Repetition of the phrase “ordinary people” is intentional. It’s the cornerstone of Airbnb’s pitch all over the world, in myriad languages.
And it’s measuring the global online holiday letting mega-corporation’s message against reality that’s the challenge with Airbnb. Take those 80 percent of people they say love them. I wouldn’t dispute that – but how many of them live in the parts of Sydney where Airbnb is most active? And if it is universally true, why are they opposed to 75 per cent of owners being able to pass by-laws that would exclude them from their buildings. That 80 percent of airbnb lovers would win the day, every time.
Ah, maybe they love the idea of using Airbnb when they travel rather than having an Airbnb holiday pad right next door. In any case we shall probably never know if the 80 percent is a lie, damned lie or just a statistic, as Mark Twain said.
So let’s start with what we do know. Sydney is the fifth most visited Airbnb destination in the world – after, London, Paris, New York and Los Angeles – and the eighth in terms of listings. Those are figures provided by Airbnb itself and there’s no reason to doubt them. We also know that it has doubled in size in Sydney every year for the past few years.
According to analysis by independent monitoring website InsideAirbnb.com, currently there are more than 23,000 Airbnb listings in greater Sydney, nearly 62 per cent of which are whole houses or apartments. The vast majority of those are in the Inner West, Eastern Suburbs, lower North Shore and Northern Beaches.
In Melbourne there are more than 12,000 listings, according to InsideAirbnb, most in a triangle bounded by Moreland, Port Philip and Elwood with the greatest concentration, naturally, in the CBD. More than 56 per cent of the listings are for entire houses or flats.
Now, Airbnb will tell you that the majority of whole-home listings are people who just want to let their house or flat while they go on holiday for a few weeks. This may be true – and InsideAirbnb.com says it’s not – but, in the big picture of the effect of Airbnb on apartment blocks, probably irrelevant.
In fact, the InsideAirbnb analysis claims that 14 per cent of listings in Sydney City have letting patterns that wouldn’t also allow for residential lets. That’s nearly 700 units and, to a much lesser extent, houses taken out of the residential market in central Sydney alone, the equivalent of four or five very large apartment blocks.
In Melbourne 23 per cent, or 1585 homes, could not be used for permanent residential rental due to the letting pattern, says the website. These figures are robustly disputed by Airbnb which says they are inaccurate and misleading.
However, their own figures are known to have been massaged beyond recognition when it suited them. A report in the New York Times last year claimed more than 1000 listings in the city disappeared just before the company claimed they had very few multiple listings.
That said, close watchers of Airbnb have noticed a change in tone from the multi-billion-dollar corporation. Gone is the brash, ‘we are ordinary people shaking up the world and you can’t stop us’, attitude.
Now they are offering compromise and conciliation. Their website urges hosts to check whether they are allowed to rent their rooms or apartments under the rules of their strata scheme or rental agreement. On the other hand, it also says they take no responsibility for the behaviour of their hosts.
Meanwhile they have even issued a set of suggested guidelines for governments and councils to adopt so that they can operate with their approval. Ignoring the underlying corporate hubris of a holiday letting agency telling politicians how it should be regulated, this signals not just a change in their attitudes but a shift in their fortunes across the globe.
Last month they dropped legal action they’d launched against the City and State of New York, where they had been challenging existing laws against residential apartments being used for holiday lets.
In San Francisco, where Airbnb was born, they lost a court case in which the company had declined to take responsibility for the content of its listings. Now the city’s legislators are moving to force Airbnb hosts to register their properties with the city and to impose a limit of 60 nights per year.
Berlin has completely banned whole home lets on Airbnb, Barcelona has fined them for breaching tourism laws, Amsterdam has put a limit of 60 nights per year that whole homes can be listed and Vienna has demand Airbnb hosts pay tourist tax.
In London, just last month, Airbnb agreed to drop listings that went over 90 nights per year if the properties didn’t have planning permission, after studies showed landlords were taking properties out of the residential market because they could make more money with holiday lets.
These are two very significant departures. Airbnb is suddenly prepared to police its hosts to make sure they don’t break planning laws – something they resolutely refuse to do elsewhere – and they admit they have an effect on the availability of residential lets, again something they strongly deny occurs here.
Make no mistake, these changes are unlikely to have been prompted by a sudden discovery of a sense of social responsibility. They occur in cities where local politicians have decided that online holiday letting offers an opportunity for the unscrupulous to prosper while “ordinary people” suffer.
Closer to home, as stated earlier, the upper house of the Victorian parliament has rejected legislation that would have kicked open the doors of Melbourne’s apartment blocks to unlimited short-stay letting.
And even little Queenstown in the South Island of New Zealand is getting in on the act with almost 800 home owners and tenants being told their rates are going to be increased by 25 per cent because they are running holiday lets, meaning they are a business rather than a dwelling.
So it’s fair to say that globally, the Airbnb aura is beginning to wear thin. The universal spin is becoming a tangled message, to the point that it can be contradictory, depending which country and which city they are in.
They may present globally as an online international hug-fest but they are not going to sit idly by and let politicians erode their massive profit base or growth potential. In NSW and Victoria, they have reportedly hired former politicians’ staffers to lobby current MPs to make sure the impending laws in both states don’t cramp their style too much.
This isn’t just standard practice for large multinational corporations, it’s par for the course for Airbnb and is not without a slightly sinister side.
An $8 million advertising campaign in California last year stymied new laws to limit short-stay letting. And according to a New York Post story (among others) Airbnb also spent $600,000 (US$457,000) campaigning against New York State Senator Sue Serino who had supported laws aimed at preventing them from listing family homes.
Might they target MPs in Victoria and NSW who publicly spoke against them? It would be politically risky but it would be neither illegal nor completely out of step with what they have done elsewhere.
Right now, their response to two NSW MPs who criticised them in Parliament has been to point out these MPs didn’t make a submission to the public inquiry last year. This writer has had to point out that MPs don’t generally make submissions in public inquiries – pubic inquiries are for the public. MPs make their submissions on the floor of Parliament where their observations go straight into Hansard and on to the permanent record.
Airbnb still goes to the warm and fuzzy in its public image. The Serino attacks were presented as defending the environment over a water pollution scandal. In Victoria they struck a deal with the government to help find homes for victims of bush fires. In Sydney, they have gone into partnership with iconic bodies such as Qantas and Sydney Opera House.
Socially aware and responsible or cynically manipulative? You be the judge.
This is all confusing for those of us who once loved Airbnb. The idea of renting a spare room in your home to a like-minded traveller was romantic and pragmatic at the same time. You’d meet new friends and make a few bucks. What was not to love about that?
But as Airbnb grew exponentially, and commercial property investors began letting multiple properties to short-stay guests whom they never even saw, Airbnb didn’t defend that original concept; instead they employed it as a moral smokescreen.
If there was any doubt that Airbnb has moved a long way from its original appeal of ordinary people from all over the world staying with ordinary people here, a quick Google search reveals the number of cleaning and key service companies set up to ensure hosts never have to set eyes on their guests.
As a journalist, over the past year or so I have gone from being a keen user and supporter of the Airbnb concept to deeply suspicious of their methods and message.
For a start, a direct question is rarely met with a straight answer. I am still waiting for responses to the following questions that I have now asked twice, in writing:
- Do you concede that Airbnb has an effect on residential rents in the areas where it is most active?
- Is it true that Airbnb in Sydney gets greater income from whole-home lets than it does from rented rooms in share situations?
- Are you aware of the Sydney host who has more than 60 properties on their list?
- Do you accept that more than 30 percent of Airbnb hosts in Sydney list more than one property?
- Would Airbnb be willing to share data and regulate the number of nights properties can be let if the regulations include limits, as in London and Amsterdam?
Perhaps it was because I said I wanted direct answers and not motherhood statements that I’ve heard nothing.
Normally at this point in a story, I would call Airbnb for a comment and, regardless of the issue, they would either give me a stock answer or say nothing at all. So let me save us both a little time out of our busy days by presenting this “best of” Airbnb responses.
The InsideAirbnb.com and the Sydney University report’s figures are inaccurate and misleading.
There is no evidence that high Airbnb activity has any effect on rents, house prices or rental availability in Sydney or Melbourne.
Airbnb encourages its hosts to abide by their local planning laws and the by-laws of their buildings.
The majority of Airbnb hosts are ordinary people letting a room in their homes while making a little money to help make ends meet, or even pay for their own family holidays, while sharing their local knowledge with visitors from overseas.
And if you believe any of that means there is no problem with increased holiday letting in apartment blocks, you probably need a vacation.
Next: Winners and losers – the main Airbnb options
Jimmy Thomson writes the Flat Chat column every week in the Sydney Morning Herald.
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I’ve used airbnb before, to rent someone’s flat when I was between units, whilst they were in Hawaii for a few weeks. In other words, I used it in the “classic” way, for peer-to-peer sharing of a spare space in a home primarily used as someone’s primary residence, whilst they were temporarily away.
I will not do so again, because since then I’ve learned more about the company’s evasive business practices that support the contravention of zoning laws in many communities, including many around Sydney. I want to send an economic message to airbnb that I do not support the company’s relying on whole-unit, most-of-year-available rentals, increasingly by investors holding multiple units who’ve realised they can better pay off their overpriced mortgages by renting by the night than leasing by the year, for a large percentage of their profits.
What’s more, I am getting this message out there. Any time someone’s asking about airbnb online or in the office, I shake my head derisively and tell them about the impact the company’s business practices have had on residential housing in popular cities around the world, that over and over again statistics show that airbnb proliferation removes dwellings from the rental pool for residents and raises rents. I explain, “If you’re unable to afford a hotel, and don’t want to stay in a hostel, I guess it’s an option, but it’s not a socially responsible choice, and I think it’s only worth chosing as a last resort.” In short, I do as much as I can to present it as the low-rent, budget option you choose only if you don’t feel you have an alternative, just as less well off people buy more chips than fresh veg — because that’s what I believe it is.
Airbnb gets a lot of mileage out of coolness and the goodness of peer-to-peer sharing and all of that. It’s a load of BS hype. The way to counter them is, I think, to get the message out that they’re just another profit seeking business increasingly populated by rent seekers who’ve overpaid for their investment properties and have to rent them out by the night to a tourist rather than by the year to a resident. This has the effect of reducing rental stock and raising rental prices for residents who want to live within 20km of their jobs. And to make it worse, airbnb is facilitating this reduction in rental supply whilst publicly claiming that they’re primarily a way for mum and dad to make a quid out of junior’s old bedroom whilst he’s away for the summer, which is NOT where most of their money comes from.
In Sydney, per InsideAirbnb (thank you Murray Cox) nearly 1 out of every 3 people offering properties on airbnb offers MULTIPLE properties. Some of this might be multiple spare rooms being rented out by a homeowner in their house, but most of these are multiple separate properties being rented out as whole-unit or whole-home rentals, which make up the bulk of Sydney rentals. And in addition to these multi-unit tycoons, plenty of the other 70% are investors with just one property to rent out full time.
This isn’t a case of mum and dad temporarily sharing space in their home to help make mortgage payments.
It’s a case of Jack making a greater return from his residential investment property than a renter could afford to pay for it as a residential rental. The same person is probably also benefiting from negative gearing, and depending on the service he or she is listing on, may or may not even be reporting the full amount of the income.
No thank you. Airbnb and services like it, get OUT of my community. You’re wrecking it both for renters who want affordable housing near their jobs rather than only 90 minutes away in areas tourists have no use for, and for strata owner-occupiers who want stable community, not a come-and-go hostel, in their building.
Airbnb’s latest thought bubble:
“Airbnb’s new building program to give strata bodies a cut of short-stay rentals”
Sounds like a PR solution rather than a practical one from here. Still more work for OC volunteers – as if we didn’t have enough to do. I’m not our treasurer, but I imagine there will be tax/non-profit status implications of such a scheme.
Airbnb – instead of dangling dollars, provide a blacklisting service so that OC communities which have decided not to allow short term lets can ban their address from your “service”? Call it an “Unfriendly Buildings Program” – you can have that one for free.
I refuse to use Airbnb’s marketing jingo: In the real world this is called attempting to bribe investors within Owners Corporations with COMMISSIONS.
When people bought into a Strata/Company Title building they voted to partake in a Residential Building and a Residential Community – the vote has already been cast.
There’s absolutely nothing stopping investors purchasing into Serviced Apartments buying Hotel shares; that’s where short-term tourists/visitors belong.
Airbnb/Stayz/Expedia et al have absolutely no right to penetrate our homes/properties with short-term lets. Go to NSW Land and Environment Court case law judgements for affirmation on this.
Airbnb will never, ever give up on trying to gain maximum profits from our housing. If it simply means less income spread over millions more Residential Lots/Homes, they’ll take it.
They now have USD31 billion to fly reps around the world plus they have the muscle to get legislators to ‘open doors’. Keep writing to your State MP plus Ministers Keen/Roberts/Dominello.
Links to the latest opinion/articles:
FWIW: After reading this in the last link:
Those against short-term lettings (and there are many of them with very valid concerns) should accept that some owners want to share their property. Instead of fighting a rear-guard action against it, the goal of the anti-Airbnb brigade should be to agitate to have government establish a good “fair use and fair pay” policy for strata living.
My biggest issue with airbnb is with implications for fire safety. Doesn’t anyone remember the Childers Backpackers catastrophe? There are reasons why hotels/hostels have more stringent building code requirements.
What happens to buildings zoned & built to code ‘residential’ when they permit/are forced to permit short stay lets? Who is responsible for bringing the building up to code & maintaining the higher level? Or won’t that be a bother until we have a coronial inquest into what went wrong in building ‘X’?
With the Manly by-election on April 8, have you heard any word on the Government’s plans in response to the Report – Adequacy of the regulation of short-term holiday letting in New South Wales – Report 1/56 October 2016.
I showed the cover sheet of the report to the Liberal candidate, James Griffin, to replace Mike Baird asking whether he had read it. No. “Well you had better read it, because look around you, and all you see are residential apartments, and your government is planning to make them open to Airbnb and other organisations, so we need an answer now, because it will affect our vote once people living in residential apartment blocks realise that they now have no protection if the Recommendations of the Report are carried through.”
I wrote to Mike Baird in January about the matter. He replied two days before his resignation advising that he had handed my email with attachment to Rob Stokes, then Minister for Planning. I have now made a submission to the new Minister Anthony Roberts, together with emailing the new Premier twice. To date no comment.
We solved the problem of holiday letting in Manly in 2004 based on Council Planning Regulations and a new bylaw. Sadly everyone believes that they have the matter under control in Manly.
Unless we receive a guarantee from the government that we are safe, the people of Manly are in for a rude awakening.
On raising this matter with our Chairman and Secretary, I was told that we were alright because of Manly Council Planning Regulations and our By-Law. Having been the one who dealt with holiday letting and took part in the Manly Council Working Party on Holiday Letting as an EC member, and having read the report, I know this is not so.
Tharra’s (5) comments and fears about the Childers Fire and short-term letting in residential properties are well founded. Neighbours Not Strangers sent a Media Release on 16 Feb 17 – it wasn’t picked up anywhere – and it featured this issue. It’s on their Facebook page or email them: neighboursnotstrangers@gmail.com. They’ll probably be glad to forward it to you. They also refer to Connie Zhang’s death at Bankstown plus the Shipping Container fire at Alexandria/Waterloo. Jimmy T had an article published – Shipping containers of strata shame – but the link is no longer working.
Airbnb’s insurance guarantee runs to about $1 million, if you can get it out of them. No one at the NSW Parliamentary Inquiry into short-term letting would guarantee payout on a building worth, say, in excess of $100 million, plus loss of life $8 million or there abouts, plus permanent incapacitation $? millions.
Strata Lot owners in NSW carry unlimited liability.