Thursday 26 April 2018

Home truths: B&B or not a B&B? That is the question

Housing Minister Simon Coveney
Housing Minister Simon Coveney
Mark Keenan

Mark Keenan

As Simon Coveney becomes the latest minister to get to grips with the housing crisis, a global revolution is underway which is causing yet another wholly unexpected disruption to residential housing supply - the Airbnb explosion.

It comes at a time when estate agents estimate that supply in the capital is running at one sixth to one twelfth of what it should be, depending on the location.

Thus far there's a familiarity about the factors which have combined to produce the mess we're in - the causes of the worst housing supply famine in memory. The established causes are: lack of solvent experienced developers after the crash; a lack of affordable credit for those remaining in the game; a financially prohibitive mix of regulations for construction, disability and heritage which combine to make refurbs and use changes unviable; prohibitive local authority levies, contributions and other stipulations; and a restrictive mortgage lending regime which has cut out buyers and put increased pressure on the rental market.

Finally, there's the years of inaction by the last Government which seemed to think the crisis was a self promotion stunt by the property sector.

Unexpectedly into this mix comes the Airbnb cyclone. And it's an animal we've never seen before. The online entity no one heard of a few years ago works on the very simple but ingenious premise of linking tourists with lettable spaces in the homes of private individuals. Tourists get accommodation which costs them less than a hotel while the resident ends up earning (usually) substantially more than regular rental rates.

It has been estimated there are now around 1,700 entire homes in Dublin hired out through Airbnb. The online giant is expanding rapidly here and if the estimates are true (there are no concrete figures issued) then Airbnb has as many units to let in the capital as has 'regular' lets.

And it most certainly means tourists are increasingly taking up spaces which would otherwise have gone to regular tenants. It's obviously not good in a housing crisis where rent levels have recently surpassed those sought at the height of the Boom.

Like any so called 'disruptive' concepts (game changing and upending the status quo), Airbnb has raised hackles around the world, particularly in the hospitality sector which is losing shekels, with Governments and local authorities who are losing taxes and, finally, with housing agencies who argue that Airbnb in cities is creating accommodation shortages.

In Berlin, local government officials have created task forces to tackle the issue and are currently trying to bring two thirds of the short term let apartments back into regular rental stock - equating to roughly 12,000 homes.

Now it looks like a regulatory backlash has begun in earnest here following a case which hit the headlines last week. The story published in this newspaper related how The Temple Bar Residents Association has successfully lobbied Dublin City Council to insist that an apartment which had been let out continuously on Airbnb (earning allegedly €79,000 per annum) should obtain a planning permission for commercial use.

The Dublin City Council ruling has certainly set a precedent of sorts but also raises big questions on whether someone's private apartment or house really can truly be classified as commercial tourist accommodation. Because when you attempt to broach the specifics, it gets very tricky.

Some questions that come to mind are:

l what if someone is going abroad for six months or three months and returning to live in their private home?;

l how many periods with the owner in full time residency nullifies the need for a commercial permission?;

l what happens where part of a home is "continuously" let on Airbnb with the owner still on the property - say in the case of an outbuilding, a granny flat or even a spare room?;

l what if it's a tree house at the end of your garden? A popular sort of novelty on Airbnb's pages.

As a major 'disruptive', Airbnb is an entirely new concept and therefore, it could be argued, it doesn't really fit under the realms of anything we currently legislate for. So attempting to use current laws and regulations against it could backfire.

A good comparison is the e-cigarette, - also new, unique and 'disruptive'. Actions by states globally to legislate it as a tobacco or cigarette product have failed because manufacturers easily proved it is not a cigarette and contains no tobacco (nothing is burned). Other state actions failed to legislate it on grounds of it being a pharmaceutical product - once again, manufacturers easily proved it was not medicinal.

Without unique legislation, enforcement will break down on the specifics of every case. It will flail and fail in the nitty-gritty. Endless questions asking how long is a piece of string when it's not a piece of string in the first place.

Airbnb? A B&B or not a B&B? That will be the never ending question.

Indo Property

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