How much are short-term rentals really impacting Australia’s housing crisis and what are the proposed solutions?

The rise of short-term holiday rentals like Airbnb and Stayz has changed the way we travel, but they’re also blamed for driving up rents and exacerbating housing shortages in cities around the world.

Many places have begun to regulate short-stay rentals to encourage owners to return their properties to the long-term rental market for residents, instead of leasing them to tourists.

But there is no consistent formula — while some cities have banned it illegally, others have imposed fees or taxes.

Are Airbnbs causing the housing shortage?

Firstly, it’s worth asking whether short-stay accommodation providers like Airbnb and Stayz are actually affecting the housing market and, if so, to what degree.

Nicole Gurran, a professor of urban and regional planning at Sydney University, has been studying the sector for almost a decade and says the link has been well established.

“There’s robust research evidence now internationally that the more short-term rentals in an area, the tighter a rental market, and you see that tight rental market flow on in terms of higher rents and higher house prices,” she told 7.30.

“The research evidence shows too, that when you take short-term rentals out of the market and return them back to the long-term rental supply, that rents also fall in an area.”

For their part, the short-stay companies believe they’ve become an easy target and are a scapegoat for more the complex long-term issues that contribute to housing availability.

“We don’t think that we should be the whipping boy for those things because we don’t agree with the premise that we are either the cause or the solution to the housing affordability and availability problem,” said Eacham Curry, corporate affairs director at Stayz.

Airbnb Australia and New Zealand’s head of public policy Michael Crosby agreed: “When we look at the number of dwellings that are being used for short-term rentals, we typically expect to see that they’re a very small percentage of the overall housing market .”

Professor Gurran said that while short-term holiday rentals were not the cause of a housing crisis, they did exacerbate it in some areas that were already experiencing shortages.

“Short-term rentals contribute to a rental housing crisis where there is a shortage, but it would be unfair to say that they are the entire problem,” she said.

“We see problems around short-term rentals where there’s a combination of factors and inadequate rental supply to begin with, an inadequate supply of social and affordable housing and low-income earners as well as those who are unable to meet the high costs of rents.”

Options for regulation

There are many different regulations that cities around the world have adopted in an effort to address issues around short-stay accommodation.

Tensions tend to be greatest in areas that have a high number of tourists and residents — some cities such as Florence in Italy and Singapore have effectively banned short-stay rentals from operating.

In Australia, regulation of the sector has mostly been left to local councils, but more and more states are considering implementing laws and levees of their own.

New South Wales has been one of the first state governments to enforce measures, including a 180-day limit for short-term rentals in Sydney and nominated regional local government areas including Newcastle, Ballina, the Bega Valley and parts of the Clarence Valley.

The regulations also include a code of conduct for hosts and guests, an annual fee and the requirement to register the property.

Professor Gurran told 7.30 that he believed the most effective way to incentivize landlords to return their Airbnb homes to the long-term rental market was placing a cap on the number of nights per year a host could use their property for short-term rental.

“Restricting the number of nights that you can rent out a property on a short-term rental platform is probably the most common way that cities try to preserve their permanent rental accommodation,” she said.

Cities like London and San Francisco only allow hosts to rent out their properties for a maximum of 90 days per year, and Melbourne looks set to follow suit with its council last week voting to implement a 180-day cap and $350 annual fee for hosts of short-term accommodation.

Another popular measure in some cities like Amsterdam and Toronto is a ‘tourist tax’, often a nightly fee of a few dollars paid by the guest, Airbnb host, or a flat rate for all tourists to a city.

While Airbnb told 7.30 it would support a nightly fee paid by guests, also known as a ‘bed tax’, Stayz was strongly opposed, saying it was an “arbitrary” measure and that “decisions which were designed to actually target us for the purposes of dealing with an economic problem is not the right way to go.”

Airbnb and Stayz are both in favor of a register, held by the state government, that would provide data on the numbers and locations of short-term properties and help inform public policy.

“We want to see statewide registration schemes and statewide systems to make sure that we don’t have multiple different councils, taking multiple different approaches on the same policy issues,” Airbnb’s Michael Crosby said.

Overall, the two main players in the short-term market – Stayz and Airbnb – say they are in favor of some regulation, partly as Stayz’s Eacham Curry says, because “they bring integrity to the sector.”

For regions like Victoria’s Mornington Peninsula, the push to regulate what the major described as the “inundation” of Airbnbs to the region must be balanced with the strong need for accommodation to support the tourism industry, a key part of the region’s economy.

“The Mornington Peninsula is a high tourist destination, we rely on short-term rentals, it’s actually really important for our economy, and really important for the 8 million visitors that come to the Mornington Peninsula every year,” Mornington Peninsula Shire’s Mayor Steve Holland told 7.30.

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