It is time for Government to regulate the short term letting sector

Posted: July 13, 2017 in Uncategorized

Listening to some of its more effusive advocates, the ‘collaborative economy’ is the co-op movement of the 21st century. It creates communities, shares wealth and helps build a better world.

The reality, of course, is very different. A new generation of brash tech savvy entrepreneurs have become increasingly adept at exploiting regulatory gaps in the services sector.

Their pitch is that they are meeting a demand at competitive prices that others can’t provide.

The concern is that their business model avoids regulations including consumer and worker protections, is open to abuse and has unintended consequences.

Amazon, Uber, BetFair and AirBnB are all household names. They are highly successful global companies employing thousands, providing services to millions and turning over billions of euros.

Their on line peer-to-peer platforms allow buyers to access good and services at lower prices and sellers to generate income without the hassle of being professional business people.

Governments have been quick to cheer the innovation of peer-to-peer platforms and rub shoulders with their multi billion euro CEOs. Unfortunately they have been slow to understand the potential risks and even slower to regulate.

This is beginning to change as the housing and homeless crisis is forcing Governments in many countries to ask serious questions of peer-to-peer short term letting platforms such as Air BnB and Rent.ie

Home sharing has become increasing popular. People are looking for a more authentic holiday experience abroad staying in the home of a local rather than some soulless generic-design hotel. If they can generate additional income by letting out their own place while away all the better.

Concerns arise when residential properties used by tourists create undue disturbance to neighbours or when professional landlords shift their properties from long term rental units to short term lets.

These concerns are reinforced by recent high profile disputes between AirBnB and municipal authorities in Barcelona and New York, resulting in significant fines and regulatory crack downs.

Last September An Bord Pleanála ruled that a property in Temple Bar, available throughout the year as a short term let on AirBnB, required a change of use planning permission.

That decision kick started a debate not only about the impact of short lets on neighbours in residential areas, but on the broader rental market at a time of low supply and increased demand.

This debate was set against the backdrop of a family homelessness crisis caused in the main by spiralling rents and distressed buy-to-let landlords issuing vacant possession notices to quit.

Policy makers and homeless campaigners asked if short term lets were further reducing the stock of rental properties and in turn exacerbating the homeless crisis.

In December the Department of Housing issued a Circular to all local authorities advising them on the implications of the Board Pleanála decision. Absent the staff to carry out effective enforcement nothing more happened.

In January the then Minister for Housing Simon Coveney committed to setting up a working group to look at the impact of short term letting on the rental market and homeless crisis. Regulations would be introduced if necessary, promised the Minister.

Unfortunately the first meeting of the working group took place just three weeks ago, seven months after the Board’s decision. In the interim Minister Coveney met with Air BnB to discuss the Platforms proposals for a Memorandum of Understanding on the operation of the sector.

Meanwhile the Oireachtas Housing committee agreed to hold a number of hearings on the issue inviting Department officials, academics, homeless NGOs and a number of platforms to share their thoughts on how best to regulate the sector.

The hearings concluded this week with, in the view of this writer, two stand out conclusions.

Firstly there is a real lack of data on the size of the short term letting sector and its impact on the rental market and the homeless crisis, particularly in high demand areas such as Dublin 1, 2, 7 and 8.

Secondly, even if its current impact is limited, the ongoing growth of the sector means that the time for well designed regulations is now.

Peer-to-peer home sharing is good for the tourist economy and the host. But we urgently need a clear legal definition of what a short term let is. Other European cities have set the definition between 30 and 90 nights a year, beyond which specific planning permission is required.

Equally platforms, hosts and guest would benefit from a simple registration system that ensures all parties understand their legal responsibilities while providing Government with the data needed to manage the sector.

Short term lets provided in properties that are not the hosts actual home should be treated differently. These are professional businesses that should be regulated as such. They must not be allowed to piggyback on peer-to-peer home sharing platforms and should face hefty fines if caught trying to do so.

Minister Eoghan Murphy and his officials in the Department of Housing have a lot on their plate. But given the experience of cities such as Amsterdam, Berlin, London, Barcelona and New York Government doesn’t have to take an age reinventing the wheel.

There is simply no reason why a robust regulatory regime that protects hosts, guests and the wider community could not be in place before the end of the year.

This article was first published in the Sunday Business Post on 2.7.17

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