Monday, July 4, 2022

NSW government left red faced over Airbnb ‘debacle’

Strata short term letting debacle

Strata short term letting debacle explained

NSW Premier Gladys Berejiklian and Better Regulation Minister Matt Kean had faces redder than the Airbnb logo this week.

Airbnb, of course, is the company that helps people rent out a room or their entire home for a night or three.  The sharing platform got the green light to roll into NSW just over a year ago, but now it and other companies like it are facing a round of NSW government regulation.

That regulation came farcically close to being announced this week — until the government suddenly cancelled the press conference with a mere hour’s notice.

Full-on revolt

Sources in the Coalition party room say it was nothing short of a full-on revolt and “debacle” that left Premier Berejiklian red-faced and Minister Kean “humiliated”.

“The Premier has been rolled by her own backbench,” deputy opposition leader Michael Daley said.

“How can anyone have any confidence that this Government can manage growth of Australia’s most important city properly when they can’t even get something through the joint party room like Airbnb,” he added.

So what on earth happened?

Late last year, the government admitted it was looking into balancing the “potential social and environmental impacts” of Airbnb-style arrangements, whilst acknowledging “the economic contribution of the industry”.

What the government came up with was a proposal that involved capping how many nights per year – 180 – a property could be rented out.  The idea is that while apartment living is on the rise, they should not turn into ‘quasi-hotels’ or full-time ‘party houses’.

In London, the cap stands at 90 days without council permission, and the caps in other global cities including Paris, Amsterdam and San Francisco range between 30 to 120 days.  In Berlin, landlords are able to apply for permits to rent a primary residence for unlimited periods and second homes for up to 90 days a year.

“The government can learn from cities around the world that have recently introduced strict regulations to counter the negative effects – particularly for housing and rental affordability – caused by the unfettered growth of unregulated commercial short-term stays,” said Carol Giuseppi, head of Tourism Accommodation Australia.

Also included in the proposed NSW legislation was a ‘two strikes’ policy for guests and hosts who cause trouble.

Back to the drawing board

But after the apparent revolt, a spokesperson for Minister Kean explained that there would be a delay “while more work is done”.

It is believed the MPs behind the revolt were concerned about the proposed cap, as there are Airbnb specific regulations in South Australia and Tasmania that do not have a cap.

Other states, notably Victoria and Queensland, do not have Airbnb regulations at all.

But also causing trouble, notwithstanding the ‘two strikes’ idea, is that Airbnb rentals could still go ahead even in the event that the strata corporation was in opposition.  One MP said her own parents live in an apartment and Airbnb tenants regularly “trash” the pool and other facilities.

“Short-term tenants bring extra wear and tear on lifts, pools, gyms and common laundries and we should be able to vote on if we’ll wear those costs in return for extra rental potential,” said Stephen Goddard, representing the Owners Corporation Network.

“It is a relief to hear the Government backbench is taken by the view that owners in general meetings should have the democratic right to decide how their building should be used,” he added.

Another issue is that Airbnb puts upwards pressure on rental prices, particularly in Sydney where affordability is already a big issue.

“This represents a concern in terms of rental supply in these areas, where some local residents in the long-term rental market might be losing out to the short-term tourism market,” said a group of experts who recently conducted research.

Simon Richardson, the mayor of Byron Shire, went as far as saying Airbnb is “gutting our community”.

But following a round of heavy lobbying, Airbnb itself will also be happy the Airbnb regulations are still up for grabs for now – even if it says it is open to “fair and progressive” rules.

Head of public policy Brent Thomas said the company contributes $1 billion to the NSW economy, including the sustaining of 7000 jobs.

“In a single year, Airbnb creates more local jobs in NSW than Snowy Hydro 2.0 will,” he said.

So after the revolt, the proposal has been thrown back to a committee, and is currently due to be discussed again in the Coalition party room on June 5.

What will happen with Strata short term letting debacle? Well that is anyone’s guess.

One strata committee chairman said the party room revolt was a victory of “the little person” over the might of big business and government.

But Patricia Forsythe, of the Sydney Business Chamber, urged the government to try again.

“No one thought that creating the regulatory framework would be easy,” she said.  “But doing nothing can never be an option.”

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