THE GOVERNMENT ANNOUNCED tighter regulations on Airbnb rentals in Ireland last week in a bid to stem rental accommodation shortages.
Housing Minister Darragh O’Brien said a “significant number, of properties have been withdrawn from the long-term rental market in recent years and diverted for use as short-term letting.”
According to the Minister, this has “negatively impacted” the availability of private long-term rentals which raised rent prices as a knock-on effect.
The regulations target areas where accommodation shortages are most critical by requiring Airbnbs in Rent Pressure Zones to have planning permission before they can be advertised on the platform.
Under the rules, from September 1, short-term let platforms like Airbnb and property owners would be fined if non-compliant properties were advertised.
Ireland isn’t alone in seeking ways to restrict short-term letting platforms like Airbnb over concerns they could be contributing to an increasingly global housing crisis.
Paris, Amsterdam, New York, Barcelona and Miami have all attempted to apply regulatory safety valves to ease the pressure officials say Airbnb and other short-term lets are putting on the housing market.
These cities share the qualities of being a tourist destination and lacking adequate affordable housing stock for local residents, the same problems Ireland’s major cities face.
Most of the tightest regulations internationally were introduced in the last three years, making it difficult to determine their effectiveness long term.
During the same period, Covid-19 walloped the tourism industry and influenced migration from city to country areas among other economic impacts, further complicating things.
But what do we know about places so far that have introduced regulations, what rules do they have in place and is there any indication they worked to induce more properties back into the normal rental market?
Let’s start with Ireland and the last attempt at regulations.
In 2019 new rules required properties to either get planning permission or apply for exemptions from local authorities to be legally advertised on Airbnb.
Like the new rules, these also applied only to Rent Pressure Zones. Exemptions were allowed to owner-occupiers and if the house was a primary residence that was used for holiday letting on only a certain amount of days.
At the time of writing according to Inside Airbnb, a third party website that scrapes data from Airbnb, there are 15,657 entire properties listed on Airbnb in Ireland compared to 851 properties listed for rent on Daft.ie.
Enforcement of the regulations appeared to be patching with only 22 applications made since 2019 for the necessary planning permission in Dublin, according to the Irish Daily Mail.
Professor of Tourism at the University of Queensland Sara Dolnica says “anything is enforceable” when it comes to rules restricting Airbnb.
However, she noted, “Airbnb hosts can be non-compliant with a million rules [...] if those rules rely on self-reporting.”
The new rules will now require Airbnb to check hosts have planning permission before they can advertise properties and if they don’t the platform is liable for fines as well as the host.
Airbnb told The Journal it wanted to “be part of the solution to help authorities protect housing and tackle property speculators that damage communities.”
In Ireland, the government committed to implementing a national registration system this year, and we encourage them to fast-track this clear, sustainable solution rather than focusing on complex stop-gap measures,” said a spokesperson.
They did not elaborate on what they considered to be stop-gap measures exactly to be.
Paris shifted similar responsibility onto Airbnb in 2017 through regulations that demanded the platform list and provide registration IDs for properties before advertising.
The IDs were then used to determine if the properties were being rented for under 120 nights per year and if the owners were paying tax.
The city successfully sued Airbnb for €8 million last year for allowing “illegal properties without registration numbers” to be advertised on their site.
There isn’t any conclusive, peer-reviewed research available yet that shows whether this was responsible for pushing more dwellings back on the residential market.
According to the Financial Times and other media sources, the French capital has 65,000 entire home listings in 2018.
Current Inside Airbnb data for July 2022 suggests that number has dropped to 47,394 listings.
However, the impact of Covid 19 on the local tourism industry could have contributed to Airbnb users selling their apartments and decreasing listings rather than regulations forcing them off the market.
According to Dr Dolnicar “prohibiting short term altogether returns most housing stock to the rental market” but sometimes only for a “while.”
For the past decade the city has been making it harder for whole dwellings to be rented on Airbnb. A 2011 law prohibited rentals for less than 30 days in buildings with multiple apartments or units, then four years later the law went one step further to ban advertising such properties.
However a report by New York publication Curbed found by May 2022 there were more entire homes Airbnb than in the New York City rental market, suggesting the rules may not have increased long-term rental supply.
Airbnb protested to the publication that it had not eaten into the residential market. A spokesperson claimed the platform’s entire supply “has decreased [...] and all the while rent prices have trended upward and city-issued permits for new development remain down.”
The company also claimed the data from Inside Airbnb and the New York City rental market couldn’t be compared like for like due to inaccuracies in third-party data providers.
Airbnb did not provide its own data on the number of listings in the city.
Hosts were able to circumvent the regulations, with one Manhattan building alone raking in $20 million from illegal Airbnb rentals.
The New York Times reported “the ring used multiple misleading identities to dodge Airbnb’s rules, text tourists and book apartments to budget-minded travelers.”
Last year New York City Council passed a new law which, like Paris, requires hosts to register their listing with the local government.
Platforms like Airbnb have to verify that listings are registered, list the registration number on the listing and show proof they obtained verification before advertising a property for rent.
If they fail to do so, both the host and the platform will be liable for fines.
According to one of the lawmakers, Council Member Ben Kalloss, the new regulations mean “nearly 20,000 homes could be returned to the rental market.”
However, there is little evidence that the rental market increased by that number when the law came into effect earlier this year.
Airbnb listings in San Francisco plunged by half in 2018 when the city brought in rules requiring the platform to delete ads without registration numbers.
However, a loophole allowing hosts to rent out their property while awaiting their application led to some listings exploiting the backlog by keeping otherwise illegal listings on the go while their status was pending.
In 2019 the San Francisco Chronicle reported that in spite of the restrictions there were 44 more listings than the previous year.
That same year a McGill university report said while the regulations “durably decreased the size of the Airbnb market” in San Francisco, this didn’t do much for housing affordability.
“Few if any Airbnb listings in San Francisco have been returned to the long-term rental market,” according to the report.
By way of possible explanation, the report says the regulations disproportionately affected casual and infrequent listings whole commercial listings expanded.
Cities around the world have successfully passed regulations similar to that of Dublin in terms of requiring the platform to list only registered properties for rent.
But as the case studies have demonstrated, regulation is only half the battle.
Enforcing the new rules is costly and time-consuming as the responsible governments have to pursue both the tech giant platform and individuals through the legal system.
That’s after dedicating resources to staff investigating and monitoring potentially unlawful Airbnb listings.
A Dutch study in 2017 summarised the dilemma faced by governments trying to impose rules on short-term rentals (STRs) with a view to protect local housing markets.
“It seems that no matter if cities decide to prohibit or restrict, enforcement is difficult and could possibly stimulate the illegal operation of STRs.
Yet, not responding to the rise of STRs and their externalities is no option either,” said the report.
In the case of Ireland, housing availability, rent prices, time, and enforcement will determine just how successful its response will be.
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