Sunday 25 September 2016

Are the doors slamming shut on Airbnb?

Temple Bar residents are up in arms, Berlin banned short-term lets and San Francisco has introduced tough new regulations. How will the online accommodation booker ride out this storm?

Published 12/06/2016 | 02:30

In it for the long-term: Declan O'Brien of the Temple Bar Residents Association is against short-term lettings.
In it for the long-term: Declan O'Brien of the Temple Bar Residents Association is against short-term lettings.

It was a sales brochure for a two-bedroom apartment that did it. Located in Crown Alley, in the heart of Dublin's Temple Bar, and with a guide price of €425,000, the blurb noted that the property was being rented out to Airbnb customers 90pc of the year. And then came the really eye-catching detail: in the space of just 12 months it had brought in revenue of €79,000 for its owners thanks to all those short-term lets.

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For the Temple Bar Residents Association, established to safeguard the interests of those living in the historic quarter, it was the final straw. Here was the proof they needed of the rampant commercialisation of Airbnb, one that had been apparent to members of the association for at least two years.

When they brought the brochure to the attention of Dublin City Council, the council ruled that the apartment must have planning permission in order for it to be used for the commercial use of short-term letting.

Last weekend's decision - which the council stressed was "site specific" to this particular apartment, and not applicable to Temple Bar as a whole - is being seen as a significant blow for Airbnb, which has had its fair share of controversies this year.

Declan O'Brien, secretary of the Temple Bar Residents Association, says the ruling is a victory for common sense.

"It can be extremely disruptive to live next to a property that's constantly in use on a short-term lettings basis because of the comings and goings all the time, and because people on holiday act differently and set different hours to permanent residents who have work and keep regular hours and so on," he says.

"But, more seriously in terms of the bigger picture, it skews the market when it comes to sales and rent, and that's the last thing we need when the city is facing a housing shortage as bad as the one we have now."

There is a significant shortfall in housing stock in the country, yet a sobering situation exists where more properties are available to rent in Dublin on a short-term basis through Airbnb and other firms than 'regular' homes on the residential rental market. Could such housing stock help alleviate the market burden?

O'Brien certainly thinks so. A Temple Bar resident for 13 years, he says the association is aware of cases where tenants have been forced out of apartments due to enormous rent increases as some landlords move to capitalise on an environment where they can comfortably command €150-a-night for short-term lets.

And, he insists, the problem is not just confined to Dublin's most popular tourist enclave - Airbnb is a city-wide phenomenon and has changed the complexion of certain pockets of the country, too.

In the past month, the popular tourist town of Dingle, Co Kerry, has been struggling to secure the seasonal service staff it so badly needs because there is a chronic shortage of accommodation.

Flats and spare rooms that were previously available are now being rented out on a short-term letting basis to tourists as the area copes with the influx of visitors buoyed by the exposure it got in the last Star Wars film, which featured Skellig Michael.

The Airbnb-model is on the receiving end of much of the blame.

Often cited as the best example of the sharing economy, the eight-year-old firm has had a challenging 2016. Only this week, its home town of San Francisco introduced regulations demanding that the site only post listings of properties from owners registered in the city. The housing shortage in the Californian city, the gateway to Silicon Valley, has led to some of the most exorbitant residential rents in the world.

Airbnb says it is considering "all options" to challenge this ruling and insists that several of its hosts there rely on sub-letting their properties in order to keep up with mortgage repayments.

Berlin has taken an even more stringent approach. The city has banned the renting out of more than 50pc of homes, effectively ending the possibility of making entire apartments and houses available.

The ruling, which came into effect on May 1, was upheld in a German court on Wednesday. Those found to be in breach of the new law face a fine of up to €100,000. Anyone after the Airbnb experience in the German capital will have to share with the owners of those properties.

It was that very experience of sharing with strangers that kicked off Airbnb back in 2008. Two of its founders, Brian Chesky and Joe Gebbia, created an ad-hoc B&B in their San Francisco loft during a conference that saw an influx of visitors to the city.

Short on rent that month, the pair took in three guests and provided homemade breakfast. Their temporary house-mates slept on simple, blow-up air mattresses - and that's where the Airbnb name came from.

A website was launched in March 2009, and Airbnb became one of the fastest growing start-ups ever, having initially gained traction in San Francisco and New York.

Investors queued up for a slice of the action, including Hollywood actor Ashton Kutcher, who invested millions.

The company's European headquarters are based in Dublin, and the firm moved into an enormous warehouse building close to the U2 studio in Hanover Quay last month. Minister for Jobs, Enterprise and Innovation Mary Mitchell O'Connor cut the ribbon. An existing premises in nearby Ringsend - boasting one of Ireland's most distinctive open-plan offices - will also remain in use by Airbnb.

Despite the tribulations it has faced in Berlin, San Francisco and elsewhere, Airbnb continues to be enormously popular. It is estimated that properties registered with it globally will welcome about one million guests this month alone.

It's growing fast in this country too. Airbnb estimates that the number of hosts making accommodation available in Ireland has doubled every year since 2010. And Airbnb stays jumped by a whopping 187pc between April 2015 and April 2016. More than 240,000 people stayed in an Irish Airbnb property last year.

According to independent website insideairbnb.com, there are 3,773 Airbnb properties in Dublin alone at present. The average price is €94 per night, and almost 45pc of those are available to rent as entire homes.

A former host, based in the hipster haven of Dublin 7, believes the ideals that made Airbnb so special when it first started appear to have shifted irrevocably. "My partner and I used to rent out our spare room and we met some fascinating people," he says. "It was a great way for them to immerse themselves in a city and get local knowledge and it helped us pay the mortgage during the depths of recession, but despite really good reviews for us we found it harder to attract guests because there was such an increase in the number of entire homes available.

"Presumably, investors looked at the sort of money that could be made if they took a very commercial approach to it and they just went after that market. If you go on Airbnb today you'll see that really cool places can be yours for around €120 per night; bland city-centre hotels with no character at all are charging that at the very least, so it's a no-brainer."

For his part, Declan O'Brien of the Temple Bar Residents Association has used Airbnb in the past and says he admires the principle behind it, but believes there should be a rule limiting short-term use to no more than 30 days in a year. Such a scenario would, for instance, allow hosts to rent out their entire homes when they are on holidays.

"It's not just the anti-social stuff that can happen that affects us, but you can have cleaners going in all the time too. Then, there are security concerns, like the large numbers of people who might have keys to your apartment building."

A resident in the docklands area of the city - just up the Liffey from Temple Bar - says he has had his fill of living next door to short-term let apartments. "I've had huge rent increases in the past four years and I'm also having to get used to the fact that virtually every apartment on my floor seems to be let by the day or week. All the neighbours I had when I first moved here have gone and in their place are tourists who don't stop to think before playing loud music when they get in from the pubs mid-week.

"One or two places seem to have operated as brothels too, if the numbers of lone men I've seen looking sheepish and lost on the landing at 11 at night is anything to go by. Despite the high rent, I really like living here, but I worry that my landlord will do the sums and think 'I can make more money by renting the place out on Airbnb than having the same tenant from one year to the next.'"

Airbnb, meanwhile, says it is providing a compelling service that helps both hosts and guests. "Airbnb hosts are regular people," says public affairs manager Simon Letouze, "and the majority rely on this additional income to pay the bills and stay in their homes. They're not typically businesses or professionals."

He adds: "Hosts are informed to check and certify they follow local rules before they list their space - this is made clear in our terms of service. We also remind hosts about the rules on our responsible hosting page, which contains other information and resources on the rules for home-sharing."

Airbnb changed the game at the end of the last decade. But the game itself seems to be changing too.

HOW THE FIGURES STACK UP

34,000

cities and towns around the world where Airbnb properties can be found, according to the company's own data

1m

unique Airbnb properties globally. The figure includes 3,000 castles. One million guests estimated to stay in Airbnb-run homes this month

240,000

people stayed in Irish Airbnb properties in 2015. The figure is expected to be at least 300,000 this year

€79k

in Airbnb revenue that a single Temple Bar apartment allegedly brought in over a 12-month period

45%

of Dublin homes on Airbnb at present are available to rent in their entirety, according to insideairbnb.com

187%

increase in the number of Irish Airbnb hosts between April 2015 and April 2016

€94

the average nightly rate Dublin-based Airbnb homes can command, estimated by insideairbnb.com

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