Can regulating Air BNB help alleviate the rental crisis?

The emergence of short-term holiday rental platforms such as Airbnb and Stayz has revolutionised travel, offering an array of accommodation options to globetrotters.

However, these platforms have also been blamed for inflating rental prices and aggravating housing shortages in major cities around the world.

In response to these concerns, various regions have initiated regulatory measures aimed at encouraging property owners to transition their listings from short-term rentals to long-term housing for residents rather than catering primarily to tourists. However, the approaches to regulation vary considerably, ranging from outright bans in some cities to the imposition of fees and taxes in others.

Nicola Powell, chief of economics and economics at Real Estate company Domain, recognised that short stay rentals do contribute to housing affordability, but cautioned against regulation that discourages investment.

“When we look at investment properties across Australia, most are owned by Mum and Dad investors,” she said, “we need to boost rental supply overall and we need to have a diverse array of short term leasing.”

The impact

To begin addressing this issue, it’s essential to assess whether providers like Airbnb and Stayz genuinely influence the housing market and, if so, to what extent. Nicole Gurran, a professor specialising in urban and regional planning at Sydney University, has spent nearly a decade researching this sector and asserts that a well-established link exists between short-term rentals and housing dynamics.

Research indicates that when short-term rentals are converted back to the long-term rental supply, rents in the area tend to decrease.

However, short-term rental companies argue that they have become easy targets and are often blamed for more complex long-term housing issues.

Regulatory approaches

Around the world, various cities have adopted diverse regulations to address concerns related to short-term accommodation. Tensions tend to be most pronounced in regions heavily frequented by tourists and residents. While some cities have imposed outright bans on short-stay rentals, others have introduced measures such as limiting the number of nights a property can be used for short-term rentals each year.

For instance, New South Wales has implemented regulations that include a 180-day limit for short-term rentals in Sydney and designated regional areas. These regulations also entail a code of conduct for hosts and guests, an annual fee, and mandatory property registration.

Another prevalent measure, seen in cities like Amsterdam and Toronto, is a “tourist tax” levied on guests or hosts, or as a flat fee for all tourists visiting a city.

While Airbnb expresses support for a nightly fee paid by guests, known as a “bed tax,” Stayz is firmly opposed, characterizing it as arbitrary and arguing against targeting short-term accommodation platforms as a means to address economic challenges.

Both Airbnb and Stayz favor a state government-held registry that provides data on the number and locations of short-term properties to inform public policy decisions. They believe this centralized approach would ensure consistency in regulations across different local councils.