Gauging the Airbnb effect on Ireland's rental market
The hugely popular global rental website Airbnb denies it's having a major impact on availability of rental properties but, with Ireland's housing market in crisis, its presence is definitely felt.
The line of people outside the shabby looking house in hip Dublin 8 snakes on to the street. They are here to view a one-bedroom flat with a monthly rent of €1,300. Twenty two people - some of them coupled up - wait for the estate agent to arrive.
For one woman in her late 20s, apartment-hunting has become a grim, depressing and practically daily experience for the past month. And her predicament has been intensified because the home she used to live in - and loved - is now being listed on Airbnb.
"It was a friend who told me," she says. "They had been looking for somewhere close to her for her sister's family to stay for a few days, and came across a place that looked identical to the one I'd lived in until last summer.
"The landlord said he needed it for personal use so I had to leave and move back in with my parents, but I really want to get my own place now. I didn't realise that the 'personal use' meant making a killing on Airbnb."
She had been paying €1,100 per month, and the property - just a 20-minute walk from Grafton Street - is now available for €100 per night for complete occupancy.
"It's a great location and even if it's only rented out for two weeks out of four, the landlord is going to be making more money than he was from me every month. And it looks like it's been nicely done up, too. I had been afraid to complain if anything went wrong because I was only too aware of how insecure it is to rent in this country."
Another tenant pinning their hopes on this Dublin 8 flat believes Airbnb has helped make it very difficult to find a home. "There's no question that if there are more Airbnb places to let in their entirety than properties in the long-term lettings market, something is badly wrong," he says.
"But I don't blame them, it's the Government and the council that make the conditions that allows something like Airbnb to do well here."
A successful model
Airbnb is doing spectacularly well in Ireland. Last year, Airbnb guests spent €169m on Dublin lets alone. Some 403,000 people used Airbnb when visiting Dublin in 2016. Current projections show that both figures will be smashed for 2017.
According to independent website Inside Airbnb, more than 6,729 properties are available on Airbnb right now, with roughly half of those constituting entire lets (3,165).
"Airbnb is having an impact on the housing market and there's no doubt about it," says Dr Lorcan Sirr of Dublin Institute of Technology's School of Surveying and Construction Management. "Anything that takes a large stock of potential housing out of the market has to have an impact.
"Right now, there's more than two-and-a-half times the number of entire properties to rent in Dublin on a short-time basis than there are properties for the normal, long-term residential lettings market. We have this extraordinary situation where there are Dublin residents who are having to live in hotels and tourists who are staying in apartments."
Sirr, who is author of the respected book, Renting in Ireland, says Airbnb's original proposition - letting tourists stay in a room in your home - has no impact on the market, but the demands to make entire homes available unquestionably has. It's a view echoed by Declan O'Brien, a landlord and resident in Temple Bar. "I'm not opposed to the idea of Airbnb and have used it abroad, but taking entire homes out of the rental and sales stock in a time when there's such a chronic shortage of housing in Dublin really is a problem."
O'Brien has lived in Temple Bar for 14 years and says the proliferation of Airbnb properties in recent years has helped to fuel prices and create shortages. "I know that, as a landlord, I could make much more money by renting out my property than having it in the long-term lettings market, but I don't want to do it because - and, call me a hippy, if you like - I believe in the idea of community and neighbours and fairness.
"Even if you have your own property or are secure as a tenant, it's not nice to live in an environment where there are loads of short-term lets around you. It damages community and you have people coming and going all the time which creates its own problems."
Calls for regulation
But others don't share such an altruistic vision. Temple Bar and other tourist hotspots in the capital have seen a large proportion of apartments moving from long-term rents to short-term lets.
Last year, there were reports of an estate agent boasting that a two-bedroom unit they were selling could command €79,000 per annum though Airbnb.
The revelation led to An Bord Pleanála ruling that its owner required planning permission to continue renting the property out for short-term-lets. Housing bodies welcomed the decision and yet there seems to be little evidence that such policing is taking place.
"A year on, and there really has been no impact whatsoever," O'Brien says. "If anything, there are more Airbnb properties available this year than ever before."
It's a subject close to the heart of Sinn Féin spokesman on housing, Eoin Ó Broin.
Repeatedly, over the past 12 months, the TD has called on the Government to regulate the market, but those pleas appear to have fallen on deaf ears.
"Nobody can deny that there is a severe crisis in housing now and a failure to regulate Airbnb is contributing to that," he says. "In an environment in which we have thousands of people in emergency accommodation, including a large proportion of children, this is a matter of the most utmost urgency."
Airbnb was not able to supply a senior executive to be interviewed face-to-face or over the phone, despite more than a week's notice. Review had been told Patrick Robinson, Director of Public Policy, would be available to speak from San Francisco, but was then told that due to travelling commitments, he would have to answer questions by email.
An economic lifeline
What does he say to those who argue that the Airbnb model is contribution to the housing crisis in Ireland, particularly in Dublin?
"Airbnb is built on the principle of helping locals afford their homes and began when our founders couldn't afford their rent," he writes. "We see the same in Ireland today and regularly hear how Airbnb is an economic lifeline for countless families and helps them boost their income and afford their homes.
"The typical Airbnb host earns less than €5,000 by sharing their space for 50 nights a year, and almost 90pc share their primary residence.
"We care deeply about local housing concerns in Ireland," Robinson says. "We also understand this is a complex issue that existed long before Airbnb was invented.
"We are working with policymakers on clear and simple home-sharing rules that work for everyone and help ensure homes are shared responsibly. While we don't have news to share right now, our discussions are continuing and are progressing well."
Robinson is keen to point out that "entire homes shared on Airbnb represent just 1pc of the housing units in Dublin", but such a suggestion doesn't really address the problems at hand, according to Lorcan Sirr.
"It's an irrelevance, really," he says. "The figure that's important is the one in which entire homes are let out all year long, and what impact that's having. There's no regulation to speak of and, as we've seen - painfully - self-regulation does not work.
Eoin Ó Broin has met Airbnb in Dublin and has sought that figure repeatedly. He is adamant that change has to happen. "The question is how long entire homes can be let on Airbnb? The answer is probably somewhere between 30 and 90 days. That would help to eradicate the commercialisation, but would allow people to rent out their home when they're on holiday, for instance, or on a short career break."
The Berlin clampdown
Several cities, including London, have introduced such a rule, but Berlin has gone several steps further and Airbnb executives will be anxious that the tough new laws in the German capital will not come into effect here.
Last May, after concerns that thousands of homes were being taken out of the long-term rental market in Berlin, authorities clamped down on entire homes being let out. Now, such properties are only available under restricted conditions and those who flout the law risk a €100,000 fine. Furthermore, it is not permissible to let out more than 50pc of your home in Berlin.
2016 was a trying year for Airbnb as several cities - not just Berlin - put the kibosh on short-term letting providers. San Francisco - now one of the most expensive places to live on earth - has an especially thorny relationship with a company founded in that very city.
Airbnb began life in 2008 when its founders Brian Chesky and Joe Gebbia created an ad-hoc B&B in their San Francisco loft. A tech conference had seen a shortage of accommodation and, short on rent that month, the pair took in three guests and provided homemade breakfast. Their temporary housemates slept on blow-up air mattresses - hence the name.
A smart disrupter
Airbnb was born with the launch of its website in March 2009. It soon 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.
Along with Uber, it was seen as one of the leading lights in the so-called sharing economy, a smart, sophisticated 'disrupter' shaking up the long-established taxi and hotel industries. Both are celebrated for rewriting the rulebook. But, like Uber, Airbnb has had to contend with a severe backlash.
The company's European headquarters are based in Dublin, and more than 500 people are employed there. Last summer, Airbnb moved into an old warehouse building close to the U2 studio in Hanover Quay.
The premises used to house the Raleigh bicycle factory, and today it's acclaimed for its stunning interior design and a reputation as one of the quirkiest, most playful offices the country has ever seen. It's a key part of an area of Dublin colloquially named Silicon Docks, in deference to the number of tech giants that are headquartered here.
Across the still waters of Grand Canal Dock, part of Google's massive office complex can be seen and the HQ of Facebook is just a three-minute walk away. Behind Airbnb, the sky is festooned with cranes, busy at work at what will soon be the country's tallest building, Capital Dock.
Despite the tribulations it has faced in Berlin, San Francisco and elsewhere, Airbnb continues to be enormously popular. Right now, more than one million people stay in Airbnb lets every night across the globe. And the company has broadened its reach by introducing a new tourist offering, Experiences, in more than 20 cities including, as of last week, Dublin.
A handy earner
"I can't speak highly enough about Airbnb," says Clare Ross, a 64-year-old host from Clontarf in Dublin.
"My children had left home and I was alone in a four-bedroom house. As a low-income person, I was finding it hard to pay the bills. I considered selling and trading down to an apartment, but then someone said to me 'Why don't you try Airbnb?' That was two years ago and I haven't looked back, although my son had been very concerned when I said I was planning to do it. He was worried about my security."
Ross has had no trouble on that front and says she loves welcoming people from across the world into her home. This week she was hosting a couple of holidaymakers from Atlanta, Georgia. She says the social aspect trumps the money side. But the financials are good. Last year, she took in €15,000 and paid between €3,000 and €4,000 in tax.
Others are making far more than that, for much smaller properties. "I took in close to €20,000 last year for a one-bedroom apartment," says one host, "and even at the upper end of the long-term market, the place couldn't command that sort of rent per annum.
"People might say that people like me are helping to fuel a housing shortage, but why shouldn't I maximise the return on my investment? It's up to the Government to tackle housing and to introduce initiatives to stimulate large-scale residential building. And why blame Airbnb? Aren't there dozens of vulture funds who have bought up distressed properties and are now commanding huge rents for them?"
Another host who speaks to Review quit the long-term market for Airbnb shortly after rules were introduced last year to ensure that rents in pressure points like Dublin could not be increased by more than 4pc each year.
"I had been a good landlord and had kept the rent low - far less than the market rate - for my long-term tenants," she says, "but it's not advantageous to be a landlord in Dublin. The tenants left Ireland around the time the rules on rent increases had been brought in and I thought, 'I'll give Airbnb a go and see how it works for three months, and that was enough time to show that it was worth it.
"There's no question you can make more doing it but - and I'll be honest here - it can be a real pain in the ass fielding emails from prospective visitors and calls from guests when they're here. Then, there's the cleaning and upkeep, which I used to do myself, until I got wise and employed a company that specialises in the Airbnb market to do it for me. It's no doddle, but if you make sure you're a good host and make the effort for your place to stand out, you can do well."
The short let downside
Fintan McNamara, director of the Residential Landlords Association of Ireland (RLAI), says the future is not necessarily paved with gold for those who opt to quit the long-term market for short lets.
"It can be very labour intensive," he says, "and it's certainly not for everyone. But I can understand why some might be tempted because there's so much red-tape and costs when it come to being a landlord in Ireland today. It was much easier 20 years ago."
But there is an upside for him and the RLAI's members. "When rents rise, tenants tend to be much better. They're more respectful of the property - you've very little difficulties."
Meanwhile, Patrick Robinson, in his email to Review, insists that Airbnb is committed to the markets it operates in, Dublin included.
"We take local concerns seriously. It's why we work with governments on clear home-sharing rules and why we have taken proactive steps in cities like London and Amsterdam to help ensure home sharing grows responsibly and sustainably.
"We want to be good partners to cities and we welcome discussions in Ireland on clear home-sharing rules. We are working closely with policymakers and are making good progress in our discussions."
Such words have little impact on the young home-hunter Review met in Dublin 8. "I didn't get the place. Someone in front of me had brought three months' deposit in cash and it seems to have swung it for them. It wasn't a very nice apartment anyway - if it was advertised on Airbnb, nobody would want to stay there."