Will Airbnb registry be a self-inflicted wound?

As they try to untangle the apartment block defects mess largely created by self-certification, you might think the last thing NSW politicians would consider would be putting foxes in charge of the henhouse in another area of residential accommodation.

However, last week, citizens of NSW had their first look at the likely form of the state’s proposed regulation of the short-term holiday letting (STHL) industry and one critical issue – an industry-managed register of STHL listings – has alarm bells ringing.

As typified by Airbnb and Stayz and the growing multiplicity of other niche online “home sharing” agencies, STHLs are already more tightly controlled in NSW than anywhere else in Australia – although that’s not saying much.

These long-awaited regulations formalise and extend existing restrictions and establish others. They include a mandatory code of conduct, with five-year bans for properties, hosts and guests who breach it, and comprehensive fire safety requirements for holiday lets in residential homes.

OPEN AND HONEST

Globally, registries like the one suggested for NSW, have proved to be the most effective way to contain the uncontrolled spread of unsafe and unwanted holiday lets, especially in residential apartment buildings where they may be neither welcome nor, in many cases, legal.

In Japan last year, there was an 80 per cent drop in listings when hosts were obliged to acquire a registration number from their local councils and STHL agencies were required to de-list any that didn’t have one.

As for an industry-run register in NSW, if we were dealing with businesses where all the players have been open and honest in the past, apartment owners might be more confident.

But separating fact from fiction in the STHL industry is harder than it should be. For instance, until recently, Airbnb’s marketing materials perpetrated the notion that they were all about sharing homes, as in their original model.

That was a somewhat romantic notion that you could rent a room in your home to a foreign or interstate traveller and while you got some pocket money, they’d have the benefit of your local knowledge of cafes, bars, transport and other facilities.

However – and they will deny this – reliable figures show that a majority of its listings in our inner cities are empty homes, many managed and serviced by agencies – meaning hosts never meet their guests – and there are multiple listings held by a handful of hosts.  In short, to a large extent it’s a commercial enterprise.

Self-policing is also not their strongest point. Airbnb’s literature requests hosts to abide by local laws, but routinely declines to delist them, even when documented proof is provided that the hosts are in breach of planning laws and/or strata by-laws.

UNRELIABLE

Then we come to transparency. Zealously protecting the personal privacy of their hosts is a common theme in Airbnb’s dealings with governments the world over. Some say it’s their go-to tactic for avoiding too much official scrutiny.

In many places they have gone to court against city and state legislatures to oppose tourist taxes and the creation of registries like the one proposed for NSW.

Meanwhile, Airbnb routinely dismisses figures from any source but themselves as unreliable, but frequently decline to open their books to prove the point.

And it’s this Trump-like relationship with facts and figures that worries people in strata most about industry control of the registry.

It should be noted that Airbnb’s main rival, Stayz, has issued a press release welcoming the proposal for an industry-led register, saying it – and the proposed code of conduct – represent “an important step forward for clarity for communities, local governments and the industry.”

There are other aspects to the new regulations. The proposed mandatory Code of Conduct recommends that hosts, their premises and guests can have “strikes” recorded against them for non-compliance, and mandatory five-year bans if two strikes are recorded in two years.

There are also potentially substantial fines for companies and individuals who breach the STHL regulations.

And there are comprehensive fire safety regulations that could see many dubious STHLs drop out of the market rather than face the costs of installing integrated smoke and heat alarms, as well as emergency signage and lighting.

The flies in the ointment are the industry self-regulation of the registry and the proposal that the Code of Conduct complaints system will be managed by Fair Trading, a government department that has been curiously pro-STHL in the past.

OTHER STATES

But, however flawed the NSW proposals may be – and they are still up for discussion and debate – they are better than the other states’ laws.

Victoria has a laissez faire attitude, forcing apartment owners to accept holiday lets in their buildings, regardless of the wishes of the vast majority of owners and residents, not to mention the social consequences.

The result? Some large city centre blocks have as many as one-third of their apartments listed on STHL websites.

And we heard recently that a group of about 50 football fans all booked into apartments in the same large Docklands block then took over the entrance foyer for a drunken party, before breaking into the swimming pool that had been locked for the night.

Hosts in Victoria have to breach their code of conduct three times before apartments there are banned from listing. Officials say there are no plans to monitor the effect of STHLs there for another 18 months.

Tasmanians embraced the STHL concept so enthusiastically that the government ended up having to offer property investors financial inducements to put their houses and flats back on the residential rental market.

But it’s not all negative.  In Queensland, the stranglehold of on-site managers on buildings’ rental rolls is being seriously undermined by owners switching to online agencies because it costs less, is more efficient and they can choose who they let their flats to.

NSW residents and stakeholders have until September 11 to respond to the proposals which they can do online at planning.nsw.gov.au/STRA, where they will also find a link to the specific proposals through the “planning portal”.

This column first appeared in the Australian Financial Review.  Our podcast, the Flat Chat Wrap, last week discussed the Airbnb proposals.