Government has well and truly fluffed the inquiry into short-stay letting
By: Jimmy Thomson
20 October 2016

Politicians should have to take an oath similar to the one often attributed to doctors: “First do no harm.”  Greens MP Jamie Parker might want to add “be careful what you wish for” to the post-it notes next to his computer screen.

For it was Parker who opened the can of worms that the parliamentary inquiry into short-stay letting turned out to be. The Balmain state MP was rightly concerned by reports that some of his constituents were being threatened with $1m fines for letting rooms in their houses, principally through online letting agency Airbnb.   

And the subsequent Legislative Assembly inquiry into the “Adequacy of the Regulation of Short-term Holiday Letting” would certainly relieve that burden from home owners who want to make some pin money and introduce holiday-makers to their Sydney.

If only that was all it recommended, it might be a fine thing.  However, it offered a chink of light to the multimillion-dollar online letting industry, and its operatives have exploited that to the max.   

As a result, if these proposals are ever made law, apartment blocks all over the state will be thrown open to anyone and everyone who wants to run holiday lets.

If the proposals in a new report are ever made law, apartment blocks will be thrown open to anyone and everyone who wants to run holiday lets. Photo: Shakespeare

Our homes will become hotels, and the shared facilities we pay for will be rented to complete strangers who neither know nor care about the culture or standards of our buildings.

Short-term goldmine
The report, tabled in Parliament this week, gets so many things wrong, factually and attitudinally. It says strata schemes can’t ban short-stay lets – citing NSW government advice—ignoring the fact that strata schemes have been successfully excluding short-stay lets for years in NSW, often by the simple expedient of passing by-laws invoking their local zoning regulations.

Under these proposals, those protections will be swept away. This will be a goldmine for the online letting agencies whose representatives’ hands must be black and blue from high-fiving each other.

But it seems our MPs have been duped by the grubby little lie that’s at the very core of the “sharing economy” sales pitch. This is not about Aunt Jessica renting out a spare room while she saves up for a hip operation, or that she has some company too, now that Uncle Fred has passed on.

And it’s not about Josh and Patty paying off their student loans or mortgage by renting the room that will house their children … as soon as they can afford to have some.

Sixty per cent of Airbnb rentals in Sydney are for whole homes rather than shared space. Almost 30 per cent of hosts have more than one property.  Agencies like Airtasker have sprung up, where you can find someone to change the sheets, clean the unit and hand over the keys so that the “host” never has to meet the “guest”.

Big business
This is big business and it’s getting bigger. There are 9800 whole homes listed in Sydney alone – that’s the equivalent of almost 100 large high-rises that aren’t available to residential tenants. Meanwhile they are competing with short-stay hosts for any half-decent homes in popular areas.

How far is that from the image of the international hug-fest that these agencies present as their business model?

On the topic of the effect of short-stay lets on residential rents, the report admits right up front that there is a lack of reliable data to show cause and effect and, quite rightly, recommends there should be studies into this.

But later on it goes on to downplay claims that there is a relationship between short-stay lets and rental property shortages, again citing of lack of data from councils that raised this issue.

Then, in the same section, this: “Proponents of [short term rental accommodation], however, argued that a large number of property owners are able to use the money they earn through the practice to ensure that they are able to keep up with mortgage repayments.”

This comment was taken from a submission by Sharing Australia Inc, an organisation of 10,000 Airbnb hosts committed to, in their own words, enabling “home sharers to rent their spare room or whole house/apartment”.

So local councils’ views can’t be trusted without data but a pro-Airbnb group can?

And let’s look at that statement in relation to the effect on housing stock.  If you are renting a room to help you pay your mortgage, you are not affecting the residential accommodation market anyway, because you’re not letting your whole home. D’uh!

This is not a criticism of Sharing Australia – they weren’t to know that their mission statement would be taken out of context to support the view that short-stay lets don’t affect housing affordability.

By the way, if you want some data, a recent study in Los Angeles shows that short-stay rentals only need to be occupied for 83 days of the year to make the same money as a residential let.

The problem they and other cities are facing is residential leases running out at the start of the holiday season so that “hosts” can double dip on rentals.

No complaints
Another constant theme in the report was that there weren’t many complaints about short-stay letting in strata blocks.  That might have been valid were it not for the erroneous statement that owners corporations can’t prevent them.

In fact, we’ve been legitimately locking them out for years.  OK, we can’t have a by-law that says no short-term letting, per se.  But we can and do have by-laws that say the building adheres to its zoning when it states it must be residential only.

Even buildings not zoned “residential only” are finding ways of dealing with short-stay letting. And do you think the online rental agencies wouldn’t have taken a test case to the Supreme Court by if strata committees were breaking the law.

That’s one reason you haven’t had many complaints – we’ve got it under control. At a recent seminar on the new strata laws, about 40 per cent of owners said they had by-laws restricting short-stay lets.

And I will put money on it staying that way, even if the majority of MPs fall for the pro-short-stay thrust of this report. As apartment living has become part of the new normality in Australia we’ve been working out how to manage our homes in a civilised manner.

Part of that is the ongoing education of residents, many of whom are new to strata, that they can’t do whatever they want, whenever they want.

They can’t take glassware to the swimming pool because we have to drain it if something breaks. They can’t come straight out of the pool into the lifts, they can’t park wherever they feel like it and they can’t party all night every night.

Eventually most people get it, and understand that it’s to our mutual benefit. But friends on a footy trip, bridesmaids on a hens’ weekend and families in holiday mode have less than zero interest in by-laws and rules about behaviour.

So we’ve passed by-laws banning short-stay lets where we can, and where we can’t, we’ve found inventive ways of keeping them out of our buildings.  This will not change, even if the law does.

One proposal in the report suggests that strata committees should be able to take owners of units where there have been disruptive renters to the tribunal.  Stuff that for a game of soldiers.

If you force us to accept short-stay rentals where the vast majority of owners don’t want them, we will find ways of making them untenable. You want to “disrupt” the economy?  We’ll show you disruption.

And as for the hosts, you’re the ones making all the money, so you can take us to the tribunal.  Waste your time because we ain’t wasting ours.

Strata warfare
Guerrilla warfare on the common property aside, the sheer lack of concern, bordering on contempt for strata residents – owners and renters – is breathtaking.

It suits the government to allow 75 per cent of owners to force the other 25 per cent to sell their homes to developers.  But the same proportion of owners can’t decide they don’t want short-term lets in their building?

A new by-law will allow you to limit the number of people living in an apartment, but not how long they are staying?

While just about every other city in the world is trying to roll back the spread of short-stay letting, at least to reasonable levels, here in Sydney we are prepared to destroy strata communities so that individuals can line their pockets.

Ironically, the better job committees have done in maintaining standards in their buildings the more attractive they will be to opportunist investors. There are some very powerful people living in strata who are not going to take kindly to their privacy and security being compromised in this way.

The new regulation is really deregulation.  It’s a free-for-all.  There was a chance here to come up with a plan that suited most people, whether they were home-sharers or investors, pro short-stay or against.

But it has been well and truly fluffed. The report is a blueprint for disaster and should be consigned to the cross-cut shredder of history.

Oh, and spare a thought for Jamie Parker, having let the genie out of the bottle, he apparently struggled manfully to put some protections in place for strata schemes.  I wonder if he’s ruefully thinking of that other adage: “don’t fix it if it ain’t broke.”

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